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Taxability of Real state business
Are there any time limit from the year of construction builders has to pay Income tax ?Refer sec also
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Pay before due date
The Company (builders) has to applied five step model as per Ind AS 115 ‘Revenue from contracts with customers’ to recognise revenue in the standalone financial statements. The Company satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:
a. buyers take all the benefits of the property as real estate developers construct the property.
b. buyers obtain physical possession of the property.
c. the property unit to be delivered is specified in the contract and real estate entity does not have an alternative use of the unit;
d. the buyer does not have the discretion to terminate the contract;
e. the entity has right to payment for work completed to date.
income will become in the year in which all 5 conditions met.
a. buyers take all the benefits of the property as real estate developers construct the property.
b. buyers obtain physical possession of the property.
c. the property unit to be delivered is specified in the contract and real estate entity does not have an alternative use of the unit;
d. the buyer does not have the discretion to terminate the contract;
e. the entity has right to payment for work completed to date.
income will become in the year in which all 5 conditions met.
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