Accounting Treatment in case of goods received in lots / batches - Manufacturing companies

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Accounting Treatment in case of goods received in lots / batches

As per Section 16(2),

“No registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,––

a.    he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;

b.     he has received the goods or services or both.”

The credit of tax is to be booked only when the above two conditions are satisfied i.e. 

the recipient is in possession of the tax invoice or the debit note issued by the supplier and 
has received the goods or services or both.

In certain cases, goods are not completely received; for example, in case the goods are received in more than one consignment under a single invoice; in such case, the credit booked shall be restricted upto the amount of goods received.

However, as per Proviso to Section 16(4), where the goods against an invoice are received in lots or installments, the registered person shall be entitled to take credit upon receipt of the last lot or installment.

Example: Purchase of 100 kg of Material A at ` 100 per kg on 01.04.20XX.

GST Rate 18%

70kg received on 05.04.20XX

30kg received on 06.04.20XX







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