Unbuild revenue in a construction contract

[Mukund Honkan]

In respect of certain Construction Company, billing is done on completion of milestones as per client’s requirement  even if work is completed.

Company  has decided  at  the year end such completed work be booked as Un build revenue .

Pl. let us know taxability implications uner Income tax , VAT & Service tax.

It will be nice if I get relevant  case laws   regards Mukund M Honkan

 

[CAGOPALJI AGRAWAL]

Before changing the policy, please go through the revised guidance note issued by ICAI on real estate transactions.

AI Summary

Taxability of unbuilt revenue in construction contracts may alter income tax, VAT and service tax treatment; consult guidance. Tax implications arise where a construction company treats completed-but-not-billed milestones as unbuild revenue, raising questions on timing and nature of revenue recognition for income tax, VAT and service tax; review the revised ICAI guidance note before adopting such a policy change.