XYZ Ltd is billing revenue to its Customer- Wipro Ltd but billing can only happen after 2 months from service date. For eg- Jan-21 month revenue is billed in Mar-21. As a result, billing for Feb & Mar-21 was done in FY 2021-22. However, Wipro Ltd deducted tax on billings for Feb & Mar-21 on provisional basis and paid TDS in Mar-21 for Rs.65 Lacs. Billing till Jan-21 was Rs.75 Lacs.
GST Billing for FY 20-21 75 Lacs
Billing as per 26AS FY 20-21 65+75 lacs=1.40 Crores
Input Expenses for billing towards Feb & Mar-21 was incurred in Apr & May-21 so Net profit was inflated by Rs. 65 Lacs as we need to account for Provisional billing.
As a result, extra tax to be paid @ 25% of 65 Lacs i.e 16.25 Lacs with additional 4% cess.
How can we rationalise the tax payable? Can we show the revenue appearing in 26AS (Rs.65 Lacs) next year? What do we need to show in ITR and tax audit? Is there any qualifications to be made?
CAclubindia
