Real estate Company - Refund due to delay possession

[dhiraj kumar]

dear sir,

my Query is what may be the Accounting treatment & Accounting entry of refund of money to the buyer due to delay possession of Property.

Can we adjust the same with the outstanding money to be received from buyer if yes, what should be the accounting treatment for the same?

further what may be the Tax (GST or other) implication in above sase?

Thanks in advance!

AI Summary

Real estate firm seeks guidance on refunding buyer for delayed possession; implications under CGST Act discussed. A real estate company is seeking advice on the accounting treatment and tax implications of refunding money to a buyer due to delayed possession of a property. One respondent explained that such a transaction is considered a supply of services under the CGST Act, making GST applicable. Another suggested that if the money is refunded, it is not taxable as it is considered a penalty for the company, which could negatively impact financial records. The possibility of providing a discount instead of a refund was also mentioned. The term 'consideration' is not explicitly referenced in the relevant legal schedule.