Dear Professional Colleagues
Please guide me on the following issue:-
A builder/developer is constructing building and starting booking of flats before completion of construction, the activities flows in following manner:
01-01-2010 Date of construction started.
01-01-2011 Date of First Booking of Flat
Stage of completion Date of construction date of realisation
4th Floor 01-04-2012 31-05-2012 (50 percent of Flat Value)
10th Floor 01-04-2014 31-05-2014 (90 percent of Flat Value)
Possession by
Deed of conveyance 01-10-2014 01-10-2014 (100 percent of Flat Value)
Based on the above please guide me that, what will be the point of taxation for each construction stage, as it is a continuous supply contract.
Thanks in advance
Balram Pandey
Guidance Sought on Taxation Points for Continuous Supply Contract in Building Construction Under Accounting Standard 7 A builder is constructing a building and begins booking flats before the construction is complete. The construction and booking timeline is as follows: construction started on January 1, 2010, first booking on January 1, 2011, with various stages of completion and payment from 2012 to 2014. The query seeks guidance on the point of taxation for each construction stage in a continuous supply contract. Responses suggest taxation points could be based on invoicing, completion, or payment. Revenue can be booked on an accrual basis for income tax and on a completion basis for service tax, following Accounting Standard 7. (AI Summary)