Rent Arrears booked as bad debts received in this year, Treatment in GST and Income Tax

Tenant and property owner both registered in GST, During Lockdown tenant holds 3 months rent saying that he cannot give rent for 3 months, after negotiations tenant released 1 month rent by cheque DATED 10-05-2021 but the cheque was delivered on 01-06-2021 deducted 7.5% TDS showing it as F.Y-2020-21 payment

GST
When to raise the bill in GST by Property owner
1). It should be in Mar-21 and it belongs to last year
2). It should be in May-21 as date mentioned on cheque is May
3). Should it be in June-21as the cheque was handover in June Month
As the receipt was uncertain the landowner filed GST return of March-21

The pending 2 month rent is still under negotiation between both the parties and if the rent is received after 6 months , when to raise the GST Invoice

INCOME TAX
The tenant deducted 7.5% TDS on rent showing it as F.Y-2020-21 Expenditure, The property owner already calculated and paid sufficient Advance Tax for F.Y-2020-21 ,
1).Now can the Property Owner show it as this year income as income was uncertain and received after lot of effort
2).if the income shown in the previous year F.Y-2020-21 and GST invoice raised in 2021-22 can it create a problem with departments

and if balance 2 months rent is realized after submission of Income Tax returns or in next years

Great detailed question! Let's break down the GST and Income Tax treatments for the rent arrears situation you described.

1. GST Treatment: When to raise the invoice?

Basic GST rule on time of supply for rent:

Time of supply is earlier of:
- The date when invoice is issued, or
- The date when payment is received.

Your case details:

Rent relates to March 2021 (FY 2020-21) — originally due then.
Cheque date: 10-May-2021
Cheque physically received: 01-June-2021
Landlord filed GST return for March 2021 but did not raise invoice (assuming no payment received in March).

Options:

Scenario	GST Invoice Date	Comments
Invoice raised in March 2021	March 2021	Correct if invoice issued even without payment; but if no payment & no invoice issued, this is tricky.
Invoice raised on cheque date	May 2021	Allowed if invoice issued on or before 10th May (payment date). Otherwise late invoice.
Invoice raised on cheque receipt	June 2021	Allowed if payment received in June & invoice issued then.

Most prudent approach:

Since payment was received in June, and invoice was not raised earlier, the invoice should be raised in June 2021.
Landlord should have ideally issued invoice within 30 days of payment receipt.

For the pending 2 months rent:

Since rent is not yet received, invoice should be issued when payment is received or as per contractual terms.
If payment received after 6 months (delayed), issue invoice at that time (time of supply).

2. Income Tax Treatment:

Tenant deducted 7.5% TDS in FY 2020-21 (on cheque dated May 2021).

TDS is deductible when payment is made or credited (whichever is earlier).
Tenant treated payment as FY 2020-21 expenditure (may be justified as cheque date was May 2021, within FY 2020-21).

For the landlord (property owner):

Accrual vs cash basis:
Rent income is taxable on accrual basis unless books are maintained on cash basis.
If rent income for March 2021 was not accrued/claimed in FY 2020-21 (because of uncertainty or no receipt), then:
1. Landlord can show this rent income as income in FY 2021-22 when payment is received.
2. If landlord showed income in FY 2020-21 but did not receive payment, and TDS was deducted in 2020-21, there may be mismatch, but can be adjusted by filing a revised return or rectification.
The landlord must ensure correct disclosure and explain timing differences in case of scrutiny.

3. Impact of mismatch in Income Tax and GST filings:

GST department expects invoice & payment dates to match time of supply; mismatch could cause notices or penalties.
Income Tax department understands timing differences due to accrual vs payment basis.
Proper documentation & disclosures are important.

4. If balance 2 months rent is received after Income Tax return filing:

Recognize the income in the year in which rent is actually received (if cash basis) or accrual basis if already accrued.
Report as income in the relevant FY accordingly.
Ensure GST invoice is raised at time of receipt.

Summary Table

Aspect	Treatment
GST Invoice timing	Invoice to be raised at time of payment receipt (June 2021 for 1-month rent)
Pending rent invoice	Raise invoice when payment received
Income tax (Landlord)	Income taxable on accrual basis; if uncertain in FY20-21, recognize in FY21-22 when received
TDS deducted by tenant	Reported in FY20-21 by tenant, landlord to claim TDS credit accordingly
Mismatch issues	Proper explanation & documentation to avoid notices