How to file TDS on the Sale of Property – Section 194IA

Navigating the complex world of tax regulations in real estate transactions is critical for…

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Navigating the complex world of tax regulations in real estate transactions is critical for both buyers and sellers. Section 194IA of the Income Tax Act introduces the idea of Tax Deducted at Source (TDS) on the sale of immovable property, which adds another level of compliance to property transactions. This clause requires the buyer to deduct TDS at the time of property transfer, making it critical for anyone involved in real estate transactions to understand the complexities of TDS compliance. In this post, we will look at the fundamentals of filing TDS on the sale of a property under Section 194IA, providing thorough advice for purchasers and sellers.

Understanding the complexities of Section 194IA is critical for individuals who want to master the art of TDS return filing and ensure compliance with the tax rules that govern property transactions. This article not only explains the procedural aspects of TDS filing, but it also emphasizes the need of taking a TDS Return Filing Course. Such a training is beneficial for persons seeking in-depth understanding about the TDS filing procedure, guaranteeing easy compliance with regulatory standards, and cultivating financial prudence in real estate transactions. Join us on this trip as we delve into the complexities of TDS on property sales, laying the groundwork for anyone looking to improve their knowledge through a TDS Return Filing Course.

Requirements of Section 194IA – TDS on Sale of Property

When purchasing immovable property, such as a building, part of a building, or any land (excluding agricultural land) exceeding Rs 50 lakhs, the buyer must adhere to the provisions outlined in Section 194-IA of the Income Tax Act, effective from June 1, 2013.

  1. TDS Deduction Rate: The buyer is obligated to deduct Tax Deducted at Source (TDS) at a rate of 1% on the total sale amount. Notably, the responsibility lies with the buyer, not the seller.
  2. Threshold for TDS: TDS is mandatory only when the total sale price surpasses Rs 50 lakhs.
  3. Instalment Payments: If the payment is made in instalments, TDS must be deducted for each instalment.
  4. Consideration for Immovable Property: The ‘consideration for immovable property’ includes various charges like club membership fee, parking fee, electricity or water facility fee, maintenance fee, and other similar charges related to the property transfer. This applies to properties purchased on or after September 1, 2019, following the Budget 2019 amendment.
  5. TDS Calculation Example: TDS is calculated on the entire sale amount. For instance, if a house is bought for Rs 55 lakhs, TDS is applicable on the entire amount (Rs 55 lakhs) and not just the excess over Rs 50 lakhs.
  6. TAN Requirement: The buyer does not need a Tax Deduction Account Number (TAN) for TDS deposition; payment can be made using the PAN.
  7. PAN of Seller: To deposit TDS, the buyer must obtain the PAN of the seller; otherwise, TDS must be deducted at a rate of 20%.
  8. Time of TDS Deduction: TDS is deducted at the time of payment, including instalment payments.
  9. Form 26QB Submission: The TDS on immovable property must be paid using Form 26QB within 30 days from the end of the month in which TDS was deducted.
  10. TDS Certificate Issuance: After depositing TDS with the government, the buyer is required to furnish Form 16B (TDS certificate) to the seller within 10-15 days.

Understanding these requirements ensures compliance with TDS regulations and facilitates a smooth property transaction process.

Mandatory Submission of Form 26QB for TDS on Immovable Property Transfer

In accordance with the Finance Act of 2013, TDS is obligatory for the transfer of immovable property when the consideration equals or exceeds Rs 50 Lakhs.

Section 194 IA of the Income Tax Act, 1961, coupled with Rules 30, 31, and 31A, stipulates the following:

  1. Commencing from June 1, 2013, purchasers must deduct 1% tax at the time of payment for the sale consideration.
  2. The deducted tax must be deposited into the Government Account through e-tax payment options like Netbanking or authorized bank branches.
  3. The sum deducted under section 194-IA must be paid to the Central Government’s credit within seven days from the end of the deduction month.
  4. Both the seller’s and purchaser’s PANs must be compulsorily provided in an online form (Form 26QB) to furnish details about the property transaction. The facility is available on tin-nsdl.com.
  5. A TDS certificate in Form 16B, indicating the deducted and deposited taxes, must be issued by the property buyer to the seller.
  6. Form 16B can be downloaded by registering on the Centralized Processing Cell (TDS) website at tdscpc.gov.in.

Steps to Pay TDS Through Challan 26QB and Obtain Form 16B

1. Log in to Income Tax e-Filing Portal

  • Access the Income Tax e-filing portal and log in to your account.

2. Navigate to e-Pay Tax Section

  • Select “e-File” and click on “e-Pay Tax” from the dropdown menu.

3. Initiate New Payment

  • Click on ‘+ New Payment’ to start the TDS payment process.

4. Proceed to 26QB – TDS on Property

  • Click on the proceed button under the ’26QB- TDS on Property’ tab.

5. Add Buyer’s Details

  • Your details will be auto-filled. Optionally, make changes if needed. Click ‘Continue’ after entering the details.

6. Add Seller’s Details

  • Input all the seller’s details, including PAN and address.

7. Add Property Details

  • Provide property specifics such as type, address, and sale details. The system will auto-calculate the tax amount.

8. Add Payment Details

  • Select the payment mode and complete the transaction. A challan will be generated upon successful payment.

9. Register on TRACES

  • If you’re a first-time user, register on TRACES as a taxpayer using your PAN and the Challan number.

10. Obtain Form 16B

  • Check your Form 26AS after seven days to confirm the TDS payment details.
  • Log in to TRACES, go to the Download tab, and click on “Form-16B (for the buyer).”
  • Fill in the seller’s PAN and acknowledgment number, then proceed.
  • Verify details, submit a request, and after a few hours, your Form 16B will be available for download.
  • Download the ‘.zip file,’ open it with the deductor’s date of birth as the password (DDMMYYYY), and print the Form 16B.

These steps ensure a smooth process for TDS payment and obtaining Form 16B for property transactions.


Understanding the intricacies of filing TDS on the sale of property under Section 194IA is paramount for both buyers and sellers in the real estate transaction process. The step-by-step guide provides a comprehensive overview of the necessary procedures, emphasizing the buyer’s responsibility to deduct 1% of the sale consideration and the subsequent deposit of the deducted tax to the Government Account within a specified timeframe. Furthermore, the article sheds light on the mandatory filing of Form 26QB, where furnishing PAN details of both the seller and purchaser is a crucial requirement. The availability of TDS certificate Form 16B, issued by the buyer to the seller, ensures transparency and compliance with tax regulations. The provided information serves as a valuable resource for navigating the TDS filing process seamlessly.

By delving into the nuances of TDS on property transactions, this article aims to demystify the complexities associated with Section 194IA of the Income Tax Act. The outlined steps, accompanied by visual aids, enhance clarity and accessibility for individuals involved in real estate transactions. Whether navigating the e-tax payment options, understanding the timeline for depositing the deducted tax, or registering on platforms like www.tin-nsdl.com and www.tdscpc.gov.in, the article ensures a comprehensive understanding of the process. In essence, this guide not only facilitates compliance with tax regulations but also empowers stakeholders in the real estate domain with the knowledge needed to navigate the intricacies of TDS filing on property transactions successfully.

What are GST Input Tax Credit Claims under New Section 38 of the CGST Act?

The Finance Bill 2022 added a new clause to the Central Goods and Services…

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The Finance Bill 2022 added a new clause to the Central Goods and Services Tax (CGST) Act, 2017, replacing Section 38. The new Section 38 was suggested to tighten input tax credit further (ITC) claims due to the degree of ITC fraud that occurs via bogus organizations and fraudulent invoices. The requirements of this section will also assist in preventing any legal disputes.

The amended Section 38 has not yet been enacted by parliament or communicated to taxpayers. However, it may become part of the GST law in the coming months.

Let’s decode the new Section 38 and see how it affects a company’s ITC claims. The GST course in Ahmedabad are gaining utmost popularity in the recent times.

How does the existing section 38 Govern ITC claims?

The current Section 38 of the CGST Act has captioned ‘Furnishing details about inbound supplies.’ It controlled the provision of details of outward supplies (i.e., sales) by a provider, followed by the recipient (buyer) receiving such inward supplies (i.e., purchases) and claiming ITC on the same.

The extant part was built on a two-way communication paradigm but was never used. The seller provides details of outward supplies under Section 37(1), such as the GSTR-1. The buyer is then obliged to accept/modify/delete these supplies in their inward supplies report (i.e., the GSTR-2), which is subsequently transmitted back to the provider within the specified time frame.

Finally, the clause states that the receiver taxpayer must balance their inner supply with their supplier’s external supplies. If an error or omission is discovered, it should be reported to the provider. Furthermore, any tax and interest on any short payment must be paid to the government by the due date.

Understanding the revised section 38

The Finance Bill 2022 proposes a revised Section 38 headed ‘Communication of information of inbound supplies and .’ It limits input tax credit claims in several ways and inhibits two-way contact between the supplier and the customer (although it was never followed).

The new section’s objective is expressed in two subsections:

The first subsection mandates that the information of outbound supplies given by a taxpayer’s suppliers be made accessible in an automatically generated statement, i.e., the GSTR-2B. (It should be emphasized that this mechanism is already in place; the change in legislation will now support the current CGST Rules.)

The GSTR-2B is prescribed in the second subsection. In other words, it informs taxpayers about the situations in which they may and cannot claim an input tax credit (eligible and ineligible ITC).

Some of the limits under this provision involving ITC ineligibility include circumstances where the supplier has just registered under the GST law, has failed non pay their taxes, or has unlawfully obtained additional ITC, to mention a few. In the next portion of our article, we shall decode each sentence in subsection (2) using an example.

Decoding the clauses of the revised section 38

The updated Section 38 subsection (2) is significantly more difficult for taxpayers to comprehend. So, let’s go over this part clause by clause.

  1. Subsection (2) clause (a) stipulates the inbound supplies and applicable ITC for the recipient (buyer) to claim in the GSTR-2B statement. In other words, ITC is eligible.
  2. Clause (b) is more complicated. It comprises the data of inbound supplies provided by the provider in the GSTR-2B, for which no ITC may be claimed. In other words, ITC is ineligible. This clause is divided into six sections.

(i) The first portion states that ITC cannot be claimed on supplies made by a provider during the required period* following registration under the GST law.

(ii) The second section states that ITC may not be claimed on supplies provided by a provider who has not paid their taxes and has defaulted for a specified time.

(iii) The third section states that ITC cannot be claimed on deliveries for which the provider has a tax obligation more significant than the tax paid during the specified period and within the defined limit.

(iv) The fourth section states that ITC may not be claimed on supplies given by a provider if the supplier claimed ITC over what was allowed under clause (a). This section also states that the excess is decided by the stipulated limit*.

(v) The fifth section states that ITC may not be claimed on supplies provided by a provider who has failed to pay their tax due by Section 49(12), subject to the criteria and limits prescribed*.

(vi) The sixth section states that ITC may not be claimed on supplies provided by a supplier if the provider is a member of such other class of individuals as prescribed*.

Impact of ITC claims once the revised section 38 gets notified.

Most taxpayers may be perplexed as to why they cannot collect input tax credits since their suppliers are newly registered or have defaulted. When GST was implemented, it guaranteed taxpayers a continuous supply of input tax credits. Let us explain why this part was created in brief.

Since the implementation of GST, input tax credit claims have been a source of tax evasion and fraud. Every year, the government loses hundreds, if not thousands, of crores to fraudulent taxpayers who claim an input tax credit based on forged invoices. These invoices are created by firms set up expressly for this purpose and subsequently shut down. As a result, the government is now proposing this updated Section 38 to eliminate all ITC-related fraud.

When this section is notified, three things will change for taxpayers.

  1. To guarantee that their ITC claims are always eligible and correct, their reconciliation procedures will need to become more frequent, dynamic, and preferably automated.
  2. Taxpayers must guarantee that they only do business with compliant providers. Again, the market’s automated GST solutions allow taxpayers to assess their supplier’s compliance BEFORE onboarding them. Higher ITC claims result from a complying supplier.
  3. Suppose a taxpayer does not match 100% of their input tax credits or, worse, if the supplier is non-compliant (i.e., the default in paying taxes or claiming excess ITC). The receiving taxpayer (buyer) is not permitted to claim the ITC that is legally owed to them. This will raise their GST cash burden and harm their working capital.

How many taxpayers make their ITC claims process more efficient
This new part has not yet been approved by parliament. If enacted as is, taxpayers must establish a rigorous framework of vendor verification and a reasonable ITC claim procedure.

With automation, this may be accomplished in only three steps:

  • Configure the ERP to collect all invoice and vendor information.
  • Before onboarding, verify vendor compliance.
  • BEFORE sending payments to suppliers, do a dynamic matching with the GSTR-2B. If suppliers fail to comply, the buyer has the option of withholding pay.

How to Send Email Vouchers through Tally ERP 9?

Tally ERP 9 is an accounting software widely used by many businesses because it…

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Tally ERP 9 is an accounting software widely used by many businesses because it includes numerous useful features for easy record maintenance and data analysis. Tally.ERP 9 provides transaction recording, inventory management, and statutory compliance features. Accounting Vouchers are essential for better record keeping and creating a foundation for data analysis.

What is a voucher in Tally?

In Tally, a voucher is a document containing all of the details of a financial transaction and is required to record in the books of accounts. They are simple to create and modify.

Types of Tally vouchers are available in the ‘Gateway of Tally’ under ‘Transactions’.
Tally has a few predefined vouchers that can be viewed by going to Gateway of Tally > Display > List of accounts > Ctrl V [Voucher types].

Voucher types in Tally

Accounting vouchers and inventory vouchers are the two types of vouchers in Tally.

Tally accounting vouchers are further classified as follows:

  • Sales Voucher
  • Purchase Voucher
  • Payment Voucher
  • Receipt Voucher
  • Contra Voucher
  • Journal Voucher
  • Credit Note Voucher
  • Debit Note Voucher

Tally inventory vouchers are further classified as follows:

  • Physical Stock Verification
  • Material In and Material Out Voucher
  • Delivery Note
  • Receipt Note

Tally Accounting Vouchers

1. Sales Voucher

The sales voucher is used in tally to record sales. In tally, it is one of the most commonly used accounting vouchers. Invoice mode and Voucher mode are the two accounting modes in sales vouchers.

2. Purchase Voucher

When you buy a product or service, you make a purchase entry. This is recorded in a tally using the purchase voucher. It is also one of the most commonly used tally vouchers.

3. Payment Voucher

Tally supports every aspect of a payment transaction. You can get all the necessary information, such as the instrument number, bank name, available balance, and so on.

4. Receipt Voucher

When you receive payment, you can enter it into the receipt voucher.

5. Contra Voucher

Contra Voucher is used when either side of the transaction involves cash, a bank, or multiple banks.

6. Journal Voucher

This voucher can be used for a variety of purposes. Some people use it for sales, purchases, and depreciation; any adjustment entry in Tally can also be done with this voucher.

7. Credit Note Voucher

When there is a sales return transaction, a Credit Note entry is made. By default, this voucher remains deactivated. By pressing F11 and configuring features in invoicing, you can activate it.

8. Debit Note Voucher

When a purchase return transaction occurs, a Debit Note entry is generated. By default, this voucher is disabled. You can use F11 to activate it and configure its features.

Tally Inventory Vouchers

1. Physical Stock Verification

This voucher is used to keep track of a company’s inventories. In general, businesses count physical stock verification regularly and keep a record of it using this voucher. This helps to keep inventory under control.

2. Material In and Material Out Voucher

This voucher is widely used in businesses that employ people. It aids in the tracking of inventory sent and received by a worker. For better record keeping, include information such as the item’s name, price, and quantity.

3. Delivery Note

This voucher is used to document the receipt of goods. It is also known as a Delivery Challan.

4. Receipt Note

This voucher is used to track the receipt of goods from vendors. It also has extra features that allow you to enter the vehicle number, dispatch document number, bill of lading, and other information.

E-Mail Configuration in Tally

Tally’s e-mailing capability is being set up. ERP 9 is a one-time installation. ERP 9 is simple and easy to use because the user can select some of the most commonly used e-mail service providers, and various details such as Server Address, Port Number, and Authentication details are pre-filled based on such selection.

Suppose you use an e-mail service provider other than those listed in Tally.ERP 9, you can select User-defined, enter the necessary information, and begin e-mailing reports immediately.

After successfully configuring e-mail in Tally.ERP 9, you can send ledgers, pay slips, definitive statements, confirmation of accounts, reminder letters, and other documents to various parties/customers without using an external e-mail application.

To configure E-Mail in Tally.ERP 9, follow these steps:

  • Navigate to Tally Gateway > F12: Configure > E-Mailing.
  1. Choose the required E-Mail Server from the list of available Common Mail Servers. When choosing a Common Mail Server, the server address and port number are pre-filled in the Server Address field.
  2. Enter the name of your SMTP server, followed by the port number, in the Server Address field (E.g., smtp.gmail.com:465 or smtp.yahoo.com:455). For more information, contact the service provider or network administrator.
  3. The option Use SSL is configured automatically based on the E-Mail Server selected. This option communicates over secure networks and sends emails through secure mail servers. E-mail service providers such as Gmail, Hotmail, and Yahoo Mail communicate via a secure network/server.
  4. The option Use SSL on Standard Port is automatically configured based on the E-Mail Server selected. Some providers communicate over a secure network using the default port (port 25).
  5. The From field displays the name of the company specified in the Company Creation screen by default.
  6. The From E-mail Address field displays the e-mail address entered when the company was created. If you haven’t already done so, or if you want to change your email address, enter it here. This will not be added to the company master or saved for future reference.
  7. If the mail server requires authentication, enter the user name and password in the respective Authentication User Name and Password fields. (For more information, please contact the System Administrator.)
  8. Choose the required attachment format from the Formats list. The attachment in the format chosen is emailed to the recipient.
  9. Set the option Show additional details for an e-mail address to Yes to display further information when e-mailing a report and select the e-mail address in the To E-Mail Address or CC To field.

Tally. ERP 9 is now set up to send emails. Click here to check out Tally Prime Course in Ahmedabad.

How Accrued Revenues Are Recorded As Liabilities?

When running a business, one of the most important things to keep track of…

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When running a business, one of the most important things to keep track of is how much money comes in and whether or not that’s enough to cover all the costs that come with running the business. Even though it’s easy to think of revenue as “automatic” when a good or service is sold or exchanged, it’s not always as easy to actualise it. Only when income comes as a cash payment right away does it count as income. Instead, a business is more likely to have accrued revenues. An accountant will usually record changes to accrued payments by making debit and credit journal entries at set times. This makes it simpler to keep track of accumulated income and maintains the balance sheet in good shape.

What Does Accrued Revenue Mean?

Accrued revenue is the money a business has earned from a sale that has already happened, but the customer hasn’t yet given them the money.

A company’s net payment terms with its clients or customers often lead to accrued revenue. In this case, if a company gives all of its clients net-30 payment terms, a client could decide to buy an item on April 1, but they wouldn’t have to pay for it until May 1. For example, if the item costs $100, the company would record $100 in earned revenue for April. Then, when May 1 comes around and the payment is made, the company would make an entry of $100 to account for the cost.

How are Changes to Accrued Revenue Recorded?

When accrued revenue is first recorded, the amount of accrued revenue is shown on the income statement as revenue. The exact amount is taken from an account for accrued revenue on the company’s balance sheet, which could be in the form of accounts receivable.

When the customer pays, the company’s accountant will change the amount of money that has already been earned. The accountant would make an altering journal entry in which the aggregate of cash received from the customer would be deducted from the cash account on the balance sheet and credited to the accrued revenue account or accounts receivable account, lowering that account.

This standard practice of maintenance the balance sheet in balance keeps track of the correct amount of revenue earned keeps track of the proper amount of cash received and doesn’t change the amount of payment shown on the income statement.

Accrued Revenue Examples

It’s excellent to understand how accrued revenue works on a theoretical level. But it won’t help you if you can’t put it into action. Here are some examples of using what you know about accrued revenue in real-world business situations.

Example 1

Let’s say that customer Y deals with company ABC to get 24 pieces of machinery in a year. Since this is a long-term project, company ABC can choose to count each piece of equipment or set of equipment as a milestone for which they will get paid when the project is done.

Whether company ABC bills for the service after each milestone or at the end of the year, it will still be counted as accrued revenue. But in the books of client Y, the same thing will be written down as expenses that have already been paid.

Example 2

You run a consulting business and charge $20 per hour for your services. In one project, a business client wants 100 hours of consultations done in four months. You have already helped people for 50 hours by the end of February. But you won’t send the $2,000 bill until the project is finished at the end of April.

For January, February, March, and April, you will record $500 as income that has already been earned. When you finally send the bill, you’ll turn it into an account receivable. When the payment comes in, you’ll turn it into cash.

How to Interpret?

On the balance sheet, earned revenue is shown as an asset, but it’s not always as valuable as cash. To turn it into cash, you have to bill the customer and get the money from them. The working capital cycle can be hurt by having a lot of past-due payments. It could mean a business isn’t doing a good job of getting customers to pay for its services.

This idea is needed to ensure that income and costs balance. If a business doesn’t have any accrued revenue, its initial revenue and profits may be too low. This doesn’t show what the company is really like. Also, suppose you don’t use these accrued revenues. In that case, your revenue and profit recognition may be lumpier since revenue is only recorded when invoices are sent, which is usually after a long time.

Presentation of Accrued Revenue

The debit balance in the account for past-due bills shows up on the balance sheet as a current asset. The change in the accrued revenue account each month is shown on the income statement at the top of the information in the revenue line item. It is rarely shown on the income statement apart from billed revenue.


When we think about accounting, we think about the cash-basis method, in which income is recorded when the amount is received, and expenses are recorded when bills are paid. This isn’t the only way to do accounting, and most businesses don’t use it. Instead, they use the accrual method of accounting, in which income is recorded when it is earned, regardless of when it is received, and expenses are recorded when they are made, irrespective of when they are paid. The accounting training in Ahmedabad is getting quite famous recently.

How to Adjust Entry in Accrued Revenue?

The first thing you need to know is that accrued revenue is shown as…

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The first thing you need to know is that accrued revenue is shown as the revenue on the income statement when accumulated revenue is first recorded. Accounting for accrued revenue may be done through accounts receivable, in which case a specific sum is deducted.

It is only after a consumer makes a payment that an accountant adjusts on behalf of the business. Accrued revenue or accounts receivable would be lowered due to an accounting entry in which the cash received from the client would be removed from the cash account on the balance sheet.

What Is Meant By Accrued Revenue?

When a business makes a sale, but the consumer hasn’t yet paid for it, the money they’ve already made is known as accrued revenue.

Earned revenue is frequently the result of an organization’s net payment arrangements with its clients or consumers. Customers can buy an item on April 1, but they won’t have to pay for it until May 1 if a company gives all of its customers net-30 payment terms. Suppose the item costs $100, and the corporation records $100 in revenue in April due to the sale. A $100 adjustment would then be made on May 1, when the payment is made, to account for the price.

The corporation that makes the purchase, on the other hand, records the transaction as an incurred expense in the liability area of the balance sheet.

How Are Adjustments Recorded for Accrued Revenue?

There is a distinction between accrued and actual revenue on the income statement. Accounting for accrued revenue may be done through accounts receivable, in which case a specific sum is deducted.

Customers pay, and the company’s accountant recalculates the amount of money the company has previously made. Cash received from customers would be taken from the company’s balance sheet and added to its accumulated revenue or accounts receivable, which would lower the latter’s balance.

No matter how much money is produced, how much cash is received or how much payment is recorded on a company’s income statement can be accurately tracked using this standard method.

When does Accrued Revenue Occur?

The term “accrued revenue” refers to the discrepancy between when products or services were paid for and delivered.

When situations like these happen:

  • Lending money to another corporation or person is known as a loan.
  • The “% of completion” method is used for long-term projects to record revenue.
  • In the event of a large order, Money is made dependent on the achievement of milestones.

There are Two Basic Ideas in Accrual Accounting

  1. In the period the revenue is realized and earned, it should be recorded as income. After the goods or service is delivered, revenue is earned.
  2. Generally, costs and revenues should be reported in the same accounting period. Spending is “matched” to revenue, which is a technical term.

Deferred vs Accrued Revenue

Deferred revenue occurs when a corporation receives an advance payment from a consumer before the product or service has been delivered. After the company gets the cash, deferred revenue is accounted for.

When it comes to Accrued Revenue, it’s recognized before any money is received.

Look at how Accrued Revenue and Deferred Revenue are different:

  • All accrued revenue is entered into the system at the same time. It’s a type of income earned over a more extended period.
  • Cash receipts are the result of revenue accrual. Receivables and payments are recognized after the monetary transaction, known as “deferred revenue.”
  • Deferred income is a liability because it is unearned revenue. Accounts Receivables are a form of asset accounting for accrued revenue.

Accrued Revenue for SaaS Accounting

SaaS typically generates income when the following occurs:

  • Upgrading or downgrading your system is an option
  • During the term of the subscription, any additional features are purchased
  • Set-up and migration fees are examples of one-time charges

A three-user “Yoohoo” plan costs $600 and is billed every three months to ABC’s marketing agency. Two more users are needed to access the software twenty days into the subscription period. Yoohoo was also asked to conduct a private training session for the agency.

The ABC agency is not instantly charged for the costs of adding two new users and conducting a training session. Instead, Yoohoo will see an increase in monthly revenue due to this transaction. This income will be converted into accounts receivable when the contract is renewed in the next quarter.

Is Accrued Revenue an Asset?

The term “Accrued Revenue” refers to a bill sent to a customer by a business for products or services received. Accrued Revenue” is considered an “Account Receivable” until it’s paid in full by the client. As a result, it is classified as a current asset on the balance sheet.

A considerable Accrued Revenue indicates that a business isn’t getting paid, which might be a concern for cash-flow reasons.

Why is Accrued Revenue Important?

For businesses that use accrual accounting, forecasting expenses and revenues in real-time is an essential benefit of recognizing revenue that has already been reaped. The company’s profitability may be tracked, and potential problems can be identified early on.

Since SaaS companies sell pre-paid subscriptions for services provided over time, the accrual foundation of accounting is the preferred method. The service has been rendered, and Money has been “earned” in SaaS. Revenue wouldn’t be recognized until invoices were sent out if SaaS didn’t use accumulated income. This would lead to a decrease in the number of cases in which payment is discovered. This would not demonstrate how the company is doing.

The amount of money a company has made is a good indicator of its long-term success. In addition, it aids in the understanding of how sales impact earnings and long-term expansion.


Accrued Revenue is a concept that is important to understand for most people in business. It is even more important for those doing accounting courses since this is one of the basic concepts or terms that you must know when you get into the field of accounting. The courses for the same are on an upward trend thus this field can be considered quite lucrative. Accountant Course in Ahmedabad is a must-try for this fieldset.

Accounting Learning: Accrual Accounting Concept

Accrual accounting is a type of commercial accounting that allows a company to monitor…

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Accrual accounting is a type of commercial accounting that allows a company to monitor revenue and expenses as they happen, rather than as money changes hands. It can provide an accurate picture of a company’s profitability and current assets if all parties involved in these business transactions pay on time. You can also go for computer accounting course Ahmedabad to understand these concepts in much more detail.

What exactly is accrual accounting?

Accrual accounting is a form of accounting that records and measures a company’s revenue and expenses as they occur, rather than as cash changes hands. The accrual accounting system is the polar opposite of cash accounting, which only records financial transactions after they have been paid. Accrual accounting is the generally accepted accounting principle (GAAP) that major corporations utilise since it provides a more realistic view of a company’s liquidity, current assets, and obligations.

In other words, regardless of when cash transactions occur, revenue is reported on the company’s accounting books. Accrual accounting is one of two accounting procedures; cash accounting is the other. Cash accounting only captures revenue when a cash transaction for goods and services occurs.

What is accrual accounting and how does it work?

Accrual accounting compares a company’s current and expected revenues to its current and expected expenses over the course of an accounting period. Accrual accounting includes income for services done or goods transferred even if the company has not yet received cash payment. It records expenses in the same manner. These items are normally reported on a balance sheet as accounts payable or receivable.

Accrual Accounting Eligibility

As per Companies Act, 2013, All the companies are required to follow accrual system of accounting. In India, except some professionals such as advocates and doctors all the business entities are following an accrual system of accounting. The firm or proprietorship firm has the option to choose a cash system of accounting if they do not fall under tax audit as per Income Tax Act,1961. Other than that all are required to follow an accrual system of accounting.

3 Benefits of Accrual Accounting

Here are some of the potential advantages of employing this accounting system.

  1. Provides a detailed breakdown of your company’s finances. Accrual accounting is the most commonly used accounting approach in large corporations because it provides a complete, long-term picture of a company’s financial status.
  2. It takes into account your most recent expenses. Accrual accounting provides an accurate, up-to-date picture of your company’s financial status by factoring the most recent revenue and costs into cash flow. Clients who come to a company for services but do not pay on time have no effect on the company’s financial statements.
  3. It aids businesses in their journey from small to large. Although small enterprises can pick which accounting system to use. If a small business intends to develop, employing accrual accounting from the start reduces the need to later adjust to the accrual approach.

3 Drawbacks of Accrual Accounting

Here are some of the potential drawbacks of accrual accounting, including the following.

  1. It can be difficult to keep track of. Accrual accounting is a more complex accounting procedure than cash accounting. Unpaid invoices and expenses can take more time and resources to track than simple cash accounting.
  2. It has the potential to exaggerate a company’s short-term financial position. The accrual method of accounting might create a slightly distorted picture of a company’s short-term financial status. If your firm has a big number of accounts receivable on its balance sheet that have yet to be paid, it may appear that it has more funds to meet expenses than it actually has in cash.
  3. It does not always precisely represent cash flow. In accrual accounting, a company’s revenue is dependent on prompt payment of invoices, which they cannot always control. If customers pay their bills late and the company does not have as much cash on hand as they expected, the company’s ability to pay its own debts may suffer.

What is the distinction between Accrual and Cash basis accounting?

There are two types of accounting: accrual accounting and cash accounting. In its bookkeeping, the cash accounting system solely analyses cash transactions and not pending financial transactions. This means that revenue is only recorded when money enters a business’s bank account.

Accounting on the accrual system takes into account all financial transactions, including pending transactions. The IRS permits small business owners to choose their preferred accounting technique, although bigger enterprises earning more than $25 million in a tax year must use accrual accounting to establish their financial health.

What are the different types of Accrual Accounts?

There are several kinds of accrual accounts. Accounts payable, accounts receivable, goodwill, accumulated interest earned, and accrued tax obligations are the most prevalent.

Accounts payable are debts incurred by a corporation when it gets goods or services from its vendors before paying for them. When a corporation incurs an expense using the accrual accounting technique, the debt is recorded on the balance sheet as an accounts payable obligation and on the income statement as an expense.

What is an Accrual Accounting example?

Assume an appliance store sells a refrigerator on credit to a consumer. Depending on the conditions of the company’s agreement with the consumer, it could be months or years before the store gets complete payment from the customer for the refrigerator. Using the accrual accounting approach, the retailer will record the accrued income from the sale as soon as the refrigerator leaves the store, rather than at a later date.

What effect does Accrual Accounting have on financial Statements?

The principal impact of accrual accounting is on the income statement, because the recordation of accrual basis transactions can significantly alter a company’s reported net profit or loss. Because accrual accounting can result in significant variances from cash-basis accounting results, you can look at the statement of cash flows to understand how cash flows have influenced the firm. We hope this post helped you grasp Accrual Accounting and its operations in depth.

Clarification with Respect to Section 194-O, 194-Q and 206C (1H)

1. If tax has been deducted by the e-commerce operator on a transaction under…

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1. If tax has been deducted by the e-commerce operator on a transaction under section 194-O of the Act [including transactions on which tax is not deducted on account of sub-section (2) of section 194O, that transaction shall not be subjected to tax deduction under section 194Q of the Act.

2. Though sub-section (IH) of section 206C of the Act provides exemption from TCS if the buyer has deducted tax at source on goods purchased by him, to remove difficulties it is clarified that this exemption would also cover a situation where instead of the buyer the e-commerce operator has deducted tax at source on that transaction of sale of goods by seller to buyer through e-commerce operator. (E COMMERCE OPERATOR HAS DEDUCTED THE TDS ON THE BEHALF OF SELLER)

3. If a transaction is both within the purview of section 194-O of the Act as well as section 194Q of the Act, tax is required to be deducted under section 194-O of the Act and not under section 194Q of the Act. (E COMMERCE OPERATOR HAS DEDUCTED THE TDS ON THE BEHALF OF BUYER)

4. If a transaction is both within the purview of section 194-O of the Act as well as sub-section (I H) of section 206C of the Act, tax is required to be deducted under section 194-O of the Act. The transaction shall come out of the purview of subsection (I H) of section 206C of the Act after tax has been deducted by the e-commerce operator on that transaction. Once the e-commerce operator has deducted the tax on a transaction, the seller is not required to collect the tax under sub-section (I H) of section 206C of the Act on the same transaction. It is clarified that here primary responsibility is on e-commerce operator to deduct the tax under section 194-O of the Act and that responsibility cannot be condoned if the seller has collected the tax under sub-section (I H) of section 206C of the Act. This is for the reason that the rate of TDS under section 194-O is higher than rate of TCS under sub-section (I H) of section 206C of the Act.

5. If a transaction is both within the purview of section 194-Q of the Act as well as sub-section (I H) of section 206C of the Act, the tax is required to be deducted under section 194-Q of the Act. The transaction shall come out of the purview of sub-section (1 H) of section 206C of the Act after tax has been deducted by the buyer on that transaction. Once the buyer has deducted the tax on a transaction, the seller is not required to collect the tax under sub-section (I H) of section 206C of the Act on the same transaction. However, if, for any reason, tax has been collected by the seller under sub-section (I H) of section 206C of the Act, before the buyer could deduct tax under section 194-Q of the Act on the same transaction, such transaction would not be subjected to tax deduction again by the buyer. This concession is provided to remove difficulty, since tax rate of deduction and collection are same in section 194Q and subsection (IH) of section 206C of the Act.

Nil Tax Even If Salary Income is Rs. 10 Lakhs

Can we imagine that if a salaried person is getting Rs. 10,00,000/- p.a. still,…

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how to save tax even if i earn 10 lakhs

Can we imagine that if a salaried person is getting Rs. 10,00,000/- p.a. still, he need not to pay tax under the income tax act. The answer is yes after the budget announcement it can happen with smart investment and tax planning.

Let us understand the same with an example

Income from salary10,00,000
 –Less: Standard Deduction (Under Section 16(ia)), irrespective of the allowances received by the employees of the company)(50,000)
 –Net Income from salary9,50,000
 –Less: Interest on housing loan (Max. allowable deduction under section 24(b) is Rs.2,00,000 for self-occupied house property)(2,00,000)
Gross Total Income7,50,000
Deduction under chapter VI of the Income tax act
 –Under section 80C (Max. deduction allowed is Rs. 1,50,000/-)(for investment in ELSS Mutual fund, PPF, LIP, tuition fees of school or recognized university for full-time course, NSC, KVP, a stamp duty of house, principal repayment of housing loan, sukanya samriddhi yojana, etc.)(1,50,000)
 –Under Section 80CCD (Max. deduction allowed is Rs. 50,000/- for investment in recognized National Pension scheme)(50,000)
 –Under section 80D (Max. Rs. 25,000/- for self, spouse and children and Rs. 25,000/- for parents). It will be Rs. 30,000/- if self and spouse or parents any of them is a senior citizen)(50,000)
 –Total Deduction(2,50,000)
Total Income5,00,000
Tax on total income
 –On First upto Rs. 2,50,000/-Nil
 –On Next upto Rs. 2,50,000/- @ 5%12,500
 –On Next upto Rs. 5,00,000/- @ 20%N.A.
 –Income Above Rs. 10,00,000/- @ 30%N.A.12,500
 –Less: Rebate under section 87A (Max. upto Rs. 12,500/- for a person having total income upto Rs. 5,00,000/-)(12,500)
Net Tax PayableNil

The government has given various benefits under different heads of income as well as under deduction sections of the income tax act. So, even if any person is earning Rs. 10,00,000/- p.a. he need not to pay any income tax to the government.

However, if the total income of the individual is increased even by Rs. 1/- above Rs. 5,00,000/- then benefit of section 87A is not available to individual then in that case the tax amount will be increased by Rs. 12,500/- as the benefit under section 87A is not available to the individual. Moreover, the above-mentioned benefits are available to only Individual and HUF. Partnership firm or company will not be getting such benefits of slab rate or rebate or deduction under chapter VI as mentioned above.

Super20 aim to improve students’ skills to build their careers in the accounting area. Every year we enrolled hundreds of students who are completed or pursuing B.com degree and help them to get 100% Placement Assistance after completion of our course. S20 is one of the best taxation coaching centers in Ahmedabad.

Mutual Funds in India

Mutual Funds in India   Friends, let us take a stock of some basic…

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Mutual Funds in India


Friends, let us take a stock of some basic information of mutual funds in India.


  1. Structure:

In India, Mutual Funds are having three tier structure. Mutual Fund is set up as a trust, which is sponsored by a sponsor entity. Sponsor entity takes approval from SEBI to launch mutual fund. This entity then establishes a trustee company to become trustee of the mutual fund. Most importantly, the sponsor establishes Asset Management Company (AMC) to manage the mutual fund assets. Hence, the structure will look like as below. Further, every scheme of the mutual fund needs specific separate clearance from SEBI and then can be launched.





  1. Features:

Some of the features of mutual funds are lower investment sizes, professional management, transparency, diversification, liquidity are unique and offer advantages to investors.

  1. Types of Schemes:
  2. Equity Schemes: Invests primarily into various shares and equity instruments. (Generally, 65-100%). LTCG beyond 1 year is tax free for resident Indians.
  3. Debt Schemes: Invests primarily into debentures, bonds, debt market instruments, money market instruments, Govt. Securities etc. LTCG beyond 3 years is applicable with indexation for resident Indians.
  4. Hybrid Schemes: As the name suggests, it is a combination of Equity + Debt in varied proportions. If more than 65% assets are in Equity, taxation of Equity Schemes are applied. Otherwise, taxation of debt schemes are applied.
  5. Funds of Funds: As the name suggests, these schemes invest in various mutual fund schemes. If more than 65% assets are in Equity funds, taxation of Equity Schemes are applied. Otherwise, taxation of debt schemes are applied.
  6. International Funds: As the name suggests, these schemes invest in international securities / funds. Taxation would be same as Debt Schemes, if less than 65% of the assets invested in Indian Equity Instruments.
  7. Exchange Traded Funds: As the name suggests, these funds are listed on a stock exchanges and gets traded like a share. Hence, investors can buy / sell them freely.
  8. Index Funds: As the name suggests, these funds are replica (copy) of some index like Sensex, Nifty etc. and provides matching returns of relevant index.
  9. Closed-end Funds: These funds are closed for subscription / redemption.
  10. Interval Funds: These funds are closed for subscription / redemption for a fixed interval.
  11. Open-end Funds: These funds are open for subscription / redemption on continuous basis.


  1. Transaction Types:
  2. Lumpsum Investment:

Investing any amount of money in a mutual fund scheme at one go.

  1. Lumpsum Redemption:

Withdrawing any amount of money from a mutual fund scheme at one go.

  1. Switch Transactions:

Switching-out from existing scheme of a mutual fund and switching-in the same into another mutual fund scheme. (Basically, transferring from one scheme to another).

  1. SIP (Systematic Investment Plan):

One can put every month / quarter fixed amount in a mutual fund scheme as a regular investment.

  1. SWP (Systematic Withdrawal Plan):

One can withdraw every month / quarter fixed amount from a mutual fund scheme as a regular income / withdrawal.

  1. STP (Systematic Transfer Plan):

One can transfer every month / quarter fixed amount from one scheme of mutual fund to another.


  1. Mutual Fund Industry in India:

There are around 45 mutual fund companies in India with total Assets Under Management (AUM) as on 30-Jun-17 of approx. Rs. 17 lakh Crore. E.g. ICICI Prudential Mutual Fund, HDFC Mutual Fund, SBI Mutual Fund, Franklin Templeton Mutual Fund etc. MF industry in India a growing at a very fast pace recently and is projected to grow multifold in years to come. Thousands of schemes are launched by these companies for the benefit of investors. For more knowledge and information about mutual funds India, one can visit websites of




  • By Tejas Patel