ACCOUNTING ENTRIES

[AJIT Tiwary]

Dear Expert

Pls clarify, example are given below

Mr. A and Mr. B has been created a Joint Venture Named: AB(JV) with percentage of share 52% by Mr.A and 48% of Mr.B. Now AB (JV) got the work amounted to ₹ 10Lac. But at the same time Mr. B is suffering from crisis, due to this reason Mr.B make a MOU with Mr.A in which Mr. B outsource his share of work to Mr. A for a certain consideration. It means 100% of work of JV will be completed by Mr.A against which bill will be raise by Mr. A to AB (JV) on subcontract basis but when the material supplied by the supplier and raise the bill(including royalty) to AB (JV) then how the AB (JV) Will pass the entry with gst impact because all the work has been allotted to Mr.A

Further how the validity of outsourcing agreement exist.

Thanks

[DR.MARIAPPAN GOVINDARAJAN]

You may consult expert in this regard.

AI Summary

GST treatment of subcontracted joint venture work and invoicing when one partner performs the entire contract. Treatment of accounting and tax records where one joint-venture partner outsources its contractual share to the other, with A performing all work and invoicing the JV on a subcontract basis while suppliers invoice the JV for materials including royalty; central issues are JV accounting entries, invoicing flow, GST consequences, treatment of royalties and input tax credits, and the legal validity of the outsourcing MOU.