TaxTMI 
TaxTMI 
TaxTMI 
provision accounts and book of entry
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....rovision accounts and book of entry<br> Query (Issue) Started By: - Sudhir Kumar Dated:- 18-1-2025 Last Reply Date:- 17-12-2025 Accounting - Auditing<br>Got 2 Replies<br>Companies Law<br>Can a construction company books revenue on the basis of provisions. If yes what is its impact on billing procedure and GST liability. Whether GSTR-9C and GSTR-9 will be un-reconciled due to provision entry. The b....
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....asis of a construction company to make accounting on the basis of provisioning entry. Reply By YAGAY andSUN: The Reply: Great question - and one that often trips up businesses in the construction and real estate sector. Let's break this down step-by-step: 🔹 Can a construction company book revenue on the basis of provisions? Yes - from an accounting standpoint, a construction company ca....
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....n recognize revenue based on provision (i.e., accrual basis) especially under Percentage of Completion Method (POCM) or as per Ind AS 115. 📌 This is done to match income and expenses in the correct period - even if billing hasn't occurred yet. BUT - this is purely for accounting (books of accounts), not for GST. 🔸 What's the impact on billing and GST liability? Here's the key d....
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....istinction: Basis Provision Entry (Books) GST Liability Revenue Recognition Based on stage of completion Based on time of supply rules Billing May not be done yet No billing = no GST GST Payment Not required on provision Pay only when invoice is raised or payment received ✅ GST is NOT payable merely on provision entries unless an invoice is issued or advance is received. So, yo....
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....u book revenue in your financials, but you don't pay GST unless a taxable event happens. 🔍 Will GSTR-9C and GSTR-9 show mismatches due to provision? Yes, they can show mismatches - and that's expected. Here's Why: * GSTR-9/GSTR-9C pulls turnover based on actual outward supplies reported in GSTR-1 & 3B. * Your books may show higher turnover (due to provision entries), which hasn't ye....
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....t been billed. ⚠️ This difference will appear in GSTR-9C Reconciliation - typically in Table 5B/5O (reconciliation of turnover). 🛠️ What Should Be Done? ✅ In GSTR-9C: * Mention the provision-based revenue as a reconciliation item. * Add a note like: "Provision for unbilled revenue as per Percentage of Completion Method (not liable to GST as invoice not ye....
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....t raised)." ✅ In Books: * Maintain a clear trail between: * Provision entries * Actual billing * GST invoices 📋 Summary: Aspect Provision-based Revenue Allowed in Books? ✅ Yes (Ind AS 115 / Accrual) Billing Required? ❌ Not yet GST Liability? ❌ Not until invoice/advance GSTR-9 vs Books 🔁 Difference will show - explain in GSTR-9C Risk of....
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.... Penalty? ❌ No, if well-documented Reply By Ryan Vaz: The Reply: Yes, a construction company can book revenue on a provision / unbilled basis for accounting and income-tax purposes. However, GST is NOT payable merely on provisioning entries unless a tax invoice is issued or payment is received. ? Provision entries do not create GST liability by themselves, but they often lead to differ....
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....ences between: * Books of accounts * GST returns (GSTR-3B / GSTR-1) * Annual return & reconciliation (GSTR-9 / 9C)<br> Discussion Forum - Knowledge Sharing ....