TAX for Individual Services (Contractor in IT) is on cash basis or accrual basis?

You have take care that ,  if services are  provided in March 24 ., then as per section 47 of the CGST rules 2017 , you must  have to raise the Tax Invoice within the 30 days from the date of Supply of  Service . ( 30 days is time period ) . 

Dear @ Mr Prasad Nilugal,

Query is not about GST and Billing doubts like (when will raise invoice).

Query about accounting about the income. when wil show the said income march or April...

Please check and confirm once again if it's wrong....

There are 3 types of system is being followed

1) Cash basis

2) Accural basis

3) Mercantile (both 1&2)

When you raise invoice, it is treated in Accural basis as you earned income.

In cash basis, when you receive money against invoice. It will be treated as income earned.

At the end of financial year, as per Ind As income recognition article will help you further.

To resolve, You can raise invoice at the end of 31/3/24, that invoice accounted as outstanding in your client ledger. 

These cash or Accural basis declaration is necessary in Tax Audit, the business who has turnover more than 5cr or if you have cash transaction more than 5% receipts or payment for the financial year turnover exceeded 2cr.

Thanks.

Why I mentioned rule 47 of the CGST rule , because if his business is on Accrual basis, and if  his supply of service on 1 March or 2 March., then he has to issue tax Invoice on before 31 st March as per the rules (within 30 days) ultimately he has to record transaction in the month of March 23 after issuing  tax  Invoice,. So on Accrual basis, this particular transaction pertains to F.Y 23-24 not in F.Y 24-25 . So it's totally depends when he has completed his service, if he completed after 2nd  of  March then date falls to issue invoice in April so no issue , then transaction pertains to F.Y 24-25. 

As per my knowledge  quriest  want to ask , that  this particular transaction pertains to which Financial  year for  tax purpose  ?  in terms of  Accrual  basis or  Cash basis . F.Y 23-24 or 24-25 .     

Originally posted by : prasad Nilugal
	Why I mentioned rule 47 of the CGST rule , because if his business is on Accrual basis, and if Completed his service on 1 March or 2 March., then he has to issue tax Invoice on before 31 st March as per the rules (within 30 days) ultimately he has to record transaction in the month of March 23 after issuing  tax  Invoice,. So on Accrual basis, this particular transaction pertains to F.Y 23-24 not in F.Y 24-25 . So it's totally depends when he has completed his service, if he completed after 2nd  of  March then date falls to issue invoice in April so no issue , then transaction pertains to F.Y 24-25.  As per my knowledge  quriest  want to ask , that  this particular transaction pertains to which Financial  year for  tax purpose  ?  in terms of  Accrual  basis or  Cash basis . F.Y 23-24 or 24-25 .

I don't know how it's applied in the query...

Generally Contractual services starting 1St to 30/31St after that only can raise invoices. In case any cancelled between dates then it's possible to raise invoice in between days...

Immediate billing can be raise by CA, CS, Accounting & Book Keeping, Service Engineers and any other services...

But,

Some of services raising bill in next day (or upto 10th) of the month. Bcoz, they can't raise bills on end of day without completing their works. Nobody accept this kind of billing like

Security service, Rental services, regular Transportation services, Part time Services, regular contract based services and some of other services who is working/servicing in full moths and raising bills in next days...

Please check any wrong in this reply 

Nothing wrong in your reply Sir , but in my view they have to follow rule 47 to issue tax invoice, with in 30 days from the service supply of service  and  record  the transaction  in the books on Accrual  basis  , if they are GST  registered and following Accrual  method .  please refer rule 47 .