'Advance' or 'deposits'

    Posted By : Shreya Maheshwari / Published on : 19-Apr-2019 05:01 AM / View : 47 / Comment : 1
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    Dear members,

    Please Suggest me whether to treat this advance as as ‘Advance’ or ‘Deposit’ were a real Estate Company took Advance money from its Customers in the course of business on which no interest is supposed to be paid to the customer and need advice on how to treat this amount without interest?

    Thank You
    Read more on : deposits advance

    •  Advance from customers is excluded from the definition of Deposite as per Rule 2(1) (c)

      Any amount received in the course of, or for the purposes of, the business of the company,

      (a) as an advance for the supply of goods or provision of services accounted for in any manner whatsoever provided that such advance is appropriated against supply of goods or provision of services within a period of three hundred and sixty five days from the date of acceptance of such advance:

      Provided that in case of any advance which is subject matter of any legal proceedings before any court of law, the said time limit of three hundred and sixty five days shall not apply:

      (b) as advance, accounted for in any manner whatsoever, received in connection with consideration for an immovable property under an agreement or arrangement, provided that such advance is adjusted against such property in accordance with the terms of agreement or arrangement;

      (c) as security deposit for the performance of the contract for supply of goods or provision of services;

      (d) as advance received under long term projects for supply of capital goods except those covered under item (b) above:

      (e) as an advance towards consideration for providing future services in the form of a warranty or maintenance contract as per written agreement or arrangement, if the period for providing such services does not exceed the period prevalent as per common business practice or five years, from the date of acceptance of such service whichever is less;

      (f) as an advance received and as allowed by any sectoral regulator or in accordance with directions of Central or State Government;

      (g) as an advance for subscription towards publication, whether in print or in electronic to be adjusted against receipt of such publications;

      Provided that if the amount received under items (a), (b) and (d) above becomes refundable (with or without interest) due to the reasons that the company accepting the money does not have necessary permission or approval, wherever required, to deal in the goods or properties or services for which the money is taken, then the amount received shall be deemed to be a deposit under these rules:

      Explanation.- For the purposes of this sub-clause the amount shall be deemed to be deposits on the expiry of fifteen days from the date they become due for refund.

      23-04-2019 / 04:47:34 AM

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