Unbilled revenue

[N Balachandran]

Sir,

Can we consider the unbilled revenue as turnover of the company.   We have spent money for ongoing projects but the invoice could be not  raised since the work not completed 100%.    My question is here.  Assume that, we have incurred expenses of 50% of the invoice value.  Without raising the invoice, can we book 50% of expenses incurred already as unbilled revenue and consider as turnover .  if so, will it have the service tax implications?.  are we liable to pay Service tax / VAT since it is Works contract?.  Pl clarify.

 

Regards

 

N.Balachandran

[YAGAY andSUN]

You would have to raise the Invoice/Bill/Challan within 30 days at any cost.

[N Balachandran]

Invocing can not be done unless complete 100% work as per terms of contract. Since we need to show the turnover, the cost incurred for this financial year have tobe booked as unbilled revenue?.  what is the implications on service tax point of view.

 

[KR Ramesh]

You need to accrue the revenue as per matching concept;

It would be shown as Unbilled Revenue to Revenue and would be past of turnover;

Invoice can be done after compeletion of the work/assingment;;

VAT/ Service Tax liability would be applicable after Invocing.

Regards

Ramesh

 

AI Summary

Unbilled revenue recognition: accrual-based turnover inclusion; tax liability for services and works contracts typically arises on invoicing or statutory trigger. Costs incurred on ongoing contracts may be accrued as unbilled revenue and included in turnover under the accrual/matching principle, even if invoicing is deferred by contract terms. Tax liability for services or works contracts is generally triggered by invoicing or other statutory tax points, so service tax/VAT obligations typically arise on or after issuance of the invoice, although a forum respondent advised raising an invoice within thirty days.