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Revenue policy

The CA's effective-dated choices on how the books recognise sale revenue and the costs that go with it: framework, method, possession trigger, OC rule, cost treatments and judgement areas.

Revenue policy

This tab holds the chartered accountant's (CA's) decisions on when the books recognise the revenue from unit sales, and how the project's costs reach cost of sales. Every demand, commission approval, possession step and revenue run reads the policy in force on its date, so this is where the accounting framework is settled before the first period close.

Where to find it

Open Accounting > Books in the sidebar, open the promoter's books, and choose the Revenue policy tab (the last one). Two shortcuts also bring you here: the Revenue policy button in the header of the Revenue recognition area (on Revenue runs and its sister tabs), and the Policy link in a Revenue run's summary.

You need the View permission on Books to open the books page, and the tab shows with any permission on Revenue Recognition. Without the View permission on Revenue Recognition the tab reads "No access" and "You do not have permission to view the revenue policy. Ask your administrator."

Changing anything needs the Approve permission on Revenue Recognition. In the default roles that is the Administrator and the Finance Lead. Everyone else sees the policy read-only, with the note "Only a user allowed to approve revenue (REVENUE:approve) can change the policy."

Before you start

  • Books for the promoter company (see Books). Every set of books gets a default policy dated from its begin date when it is created, so there is always one row here.
  • For Over time (cost incurred), the projects need a Budget Cost.
  • For Over time (stages achieved), the projects need Construction stages with a share of the plan.
  • The charge components need a Revenue treatment under Component mappings, so the books know which charges make up the unit's price. The standard chart ships with these set.

What you see

The Revenue policy card reads "How <books> recognises sale revenue and the costs that go with it. These are the CA's choices. A change takes effect from a date as a new policy; a policy a posted revenue run has used is locked."

The policy table

One row per policy, newest effective date first:

Column What it shows
Effective from The date the policy applies from, with the badges In force (green), Upcoming (blue, dated after today) and Locked (grey, a posted revenue run has used it).
Framework Ind AS 115, AS (Guidance Note 2012) or Revenue on billing.
Method Point in time, Over time (stages achieved) or Over time (cost incurred).
Trigger For Point in time, the possession event that recognises revenue; "—" otherwise.
Notes The CA's note, for example a memo reference.
(actions) A pencil (tooltip "Edit policy from <date>") when you can change the row, otherwise an eye ("View policy from <date>"); and a trash icon ("Delete policy") when the row can be deleted.

"In force" is the newest row dated on or before today. If every row is dated in the future, the earliest-dated row (the bottom one) counts as in force.

The policy form

The pencil or eye icon on a row opens that policy below the table; when the tab opens, the in-force policy is shown there. The heading is New policy or Policy from <date>, with "The framework and method decide when sale revenue is recognised." A locked policy shows "A posted revenue run has used this policy, so it stays as it is. To change the policy, add a new one from a later date." and every field is disabled.

Framework and method

  • Effective from (required). For a new policy the hint reads "Billing and revenue runs on or after this date follow the new policy."; when editing, "Moving the date changes which period this policy covers."
  • Framework: Ind AS 115 ("Listed companies and companies with net worth of ₹250 crore or more."), AS (Guidance Note 2012) ("Firms, LLPs and companies below the Ind AS threshold: ICAI Guidance Note on Real Estate Transactions.") or Revenue on billing ("No deferral: every demand is revenue when issued. Use only where the CA accepts it."). Default Ind AS 115.
  • Method: Point in time ("Revenue when control passes to the buyer (the possession trigger below)."), Over time (stages achieved) ("Revenue as construction stages are achieved, by their share of the plan.") or Over time (cost incurred) ("Revenue as cost is incurred against the project's estimated total cost."). Default Point in time. Under Revenue on billing the field is disabled with "Not used: revenue follows billing."
  • Progress measured per: Project or Tower ("Over time only: each tower on its own progress, or one progress for the whole project."). Always shown, but it can only be changed under an over-time method. Default Tower.

Point in time (shown only for that method, and not under Revenue on billing): "The booking event that transfers control of the unit."

  • Recognise on: Possession offered ("The day the office offers possession (after the OC)."), Possession handed over ("The day the unit is handed over to the buyer."), Deemed handed over ("A set number of days after the offer, whether or not the buyer takes the keys.") or Conveyance registered ("The day the conveyance is registered."). Default Possession handed over.
  • Days after the offer: shown for Deemed handed over, 0 to 365 ("The agreement's deemed-possession period."). Default 15.
  • Occupation certificate required (switch): "No possession can be offered, and no revenue recognised, before the tower's (or project's) OC date." Default on.

Over time (shown only for the over-time methods, and not under Revenue on billing): "How progress is measured and when recognition may start."

  • Under AS (Guidance Note 2012), three thresholds from 0 to 100 with two decimals: Cost incurred at least (%) ("Of construction and development cost, excluding land."), Area sold at least (%) ("Of the saleable area, under agreements.") and Realised per contract at least (%) ("Of each agreement's consideration."). Defaults 25, 25 and 10.
  • Count land and development rights in the cost measure (switch): only for Over time (cost incurred). "Cost method only. Off: progress is construction and development cost against its budget." Default off.

Costs: "Which costs wait in inventory and how they reach cost of sales."

  • Costs into inventory: Periodic ("Costs are booked to expense ledgers and moved to work-in-progress at each period close.") or Perpetual ("Vouchers post costs to work-in-progress directly; the close moves nothing."). Default Periodic.
  • Cost of sales shared by: By area or By sale value ("How a project's cost is split across its units."). Default By area.
  • Rehab costs (rent, corpus, shifting, PAP): Capitalise or Expense ("Capitalise: part of the project's cost of development rights. Expense: charged to the period."). Default Capitalise.
  • Borrowing costs: Capitalise or Expense ("Capitalise interest into work-in-progress while the project is under construction (Ind AS 23 / AS 16)."). Default Capitalise.
  • Onerous contracts: Provide ("A booking whose cost share exceeds its price: the run provides the loss not yet through revenue and cost of sales (Dr 5410 / Cr 2640).") or Flag only ("Only flagged on the run and the project report; the CA books the provision by hand."). Default Provide.
  • Completed units to their own inventory (switch): "Once a project has its occupation certificate, the work-in-progress share of its unsold units moves to 1510 Completed Units; a unit that sells later moves back and goes to cost of sales." Default on.

Brokerage and cancellation

  • Brokerage and other costs of obtaining a contract: Capitalise or Expense ("Capitalise: held as an asset and released with the booking's revenue. Expense: charged when approved."). Default Capitalise.
  • Expense directly when possession is within (months): 0 to 120 ("Practical expedient: 0 turns it off."); disabled when brokerage is expensed. Default 12.
  • Cancelling after revenue is recognised: Not allowed ("The booking cannot be cancelled once its revenue is in the books.") or Sales return ("Revenue and cost of sales are reversed and the unit returns to stock."). Default Not allowed.

Judgement areas: "Off unless the CA has concluded otherwise."

  • Significant financing component (switch): only under Ind AS 115 ("Interest on advances the buyer pays well ahead of possession, accrued each period."). Under the other frameworks it is disabled with "An Ind AS 115 requirement: not available under this framework." When on, two more fields appear: Discount rate (% a year), 0 to 50 ("The rate the buyer would borrow at.") and Only when payment runs ahead by more than (months), 0 to 120 ("Practical expedient: shorter gaps are ignored."). Defaults off, blank and 12.
  • Rehab units as revenue (non-cash consideration) (switch): "Redevelopment: the units handed to society members are revenue for the development rights received, at the project's fair value." Default off.

Notes: up to 255 characters ("For example the CA's memo reference.").

The Cancel and Add policy / Save policy buttons show only when you can change the form.

What you can do

New policy from a date

Opens a New policy form that starts as a copy of the policy in force today, dated today, with empty notes. The row you were looking at before is not used as the template, so open the in-force row first if you want to compare. Change what the CA has decided and save it with Add policy.

  • Who: anyone with the Approve permission on Revenue Recognition. Without it the button isn't shown.

Add policy

Saves the new policy. The message reads "Revenue policy from <date> saved." and the row appears in the table.

  • Who: anyone with the Approve permission on Revenue Recognition.
  • Refused with a message in the form when the date is taken ("These books already have a revenue policy from that date"), when the financing component is on under a framework other than Ind AS 115 ("The significant financing component is an Ind AS 115 requirement; turn it off for this framework"), or when it is on without a rate ("Give the discount rate for the financing component").
  • What happens next: demands issued, commissions approved and revenue runs with a period end on or after the date follow the new policy. Nothing is posted by saving a policy.

Edit policy from <date> / Save policy

The pencil icon opens an unlocked row for editing; Save policy stores the change with the same "Revenue policy from <date> saved." message. Moving Effective from changes which dates the policy covers.

  • Who: anyone with the Approve permission on Revenue Recognition. Others, and anyone opening a locked row, get the eye icon (View policy from <date>) and a read-only form.
  • Refused with "A posted revenue run has used this policy; add a new policy from a later date instead" if a run posted under it in the meantime, and with the same date and financing checks as Add policy.

Cancel

Closes the form without saving.

Delete policy

The trash icon asks "Delete revenue policy?" with "Dates this policy covered fall under the policy before it. The last policy of a set of books cannot be deleted." Confirm with Delete; the message reads "Policy deleted."

  • Who: anyone with the Approve permission on Revenue Recognition. The icon shows only to them, only on unlocked rows and only while the books have more than one policy.
  • Refused with "A posted revenue run has used this policy; it stays as history" or "A set of books always keeps one revenue policy; edit it instead".

Statuses

Policies have no stored status; the badges are worked out from the dates and the runs:

  • In force: the policy that applies today.
  • Upcoming: dated after today; it takes over on that date.
  • Locked: a Posted revenue run used it. It can be viewed but not edited or deleted; add a later policy instead.

Things to know

  • A policy is history once a run has posted under it. Locking keeps the posted journals explainable: the figures in the books were computed under the choices that are still on screen. Reversing that run removes the lock, because no posted figures depend on the policy any more.
  • The policy in force on the period end decides a run. A run dated 31 March uses the policy in force on 31 March, even if a newer policy has since started.
  • Revenue on billing switches deferral off. Each demand is revenue when issued, and a revenue run recognises nothing (its Left out card says "The policy recognises revenue on billing: demands already posted it"). Use it only where the CA accepts it.
  • The OC rule bites before the run. With Occupation certificate required on, the office cannot even offer possession on a unit until the tower (recorded under Structure) or the project (under Project settings) has an OC date on or before the possession date. The switch is only visible while the method is Point in time, but it stays in effect for offering possession under the over-time methods too.
  • The organization and a project can override the method and the trigger. The Projects card under Settings > Organization, section Revenue recognition, sets a Revenue method and Recognise revenue on for every project ("Books' revenue policy" unless set); a project overrides both under Accounting on its Settings tab (for example a commercial tower sold over time). The project's value wins, then the organization's, then this policy. Neither override is shown on this tab; the project's tab shows the value in force and where it comes from.
  • Brokerage follows this policy at approval time. With Capitalise, an approved commission is held as a contract acquisition cost and released by each run in step with the booking's revenue, unless the project's expected possession is within the expedient months, in which case it is expensed at once. A project with no expected possession date is treated as far away, so its brokerage is capitalised. Under Revenue on billing brokerage is never capitalised, whatever this field says.
  • Billing waits for the run under a deferring framework. Under Ind AS 115 or AS (Guidance Note 2012), a demand issued for a charge treated With the unit credits the contract liability instead of revenue; the Contract balances report shows what is billed ahead of revenue, and a revenue run draws it down.
  • Expected losses are provided by the run unless you say otherwise. With Onerous contracts at Provide, a revenue run that finds a booking (or member offer) whose cost share exceeds its price posts the part of the loss not yet through revenue and cost of sales to 5410 Expected Loss on Onerous Contracts against 2640 Provision for Onerous Contracts, and unwinds it as the loss flows through later runs. With Flag only the run only warns, and the CA books the provision by hand.
  • Completed units leave work-in-progress. With Completed units to their own inventory on, once a project has its OC (or every tower has one) each run moves the work-in-progress share of the unsold units to 1510 Completed Units - Inventory ("completed units" journal); a unit booked later moves back and goes to cost of sales with its revenue. Switch it off to keep everything in 1500 until it sells.
  • Not allowed blocks cancellation. Once a booking's revenue is in the books, the Cancel booking wizard lists the blocker "Revenue on this booking is recognised and the revenue policy does not allow cancelling it; the CA can switch the policy to a sales return". Switch the policy in force on the cancellation date to Sales return first.
  • The financing switch is checked on every save. Changing the framework away from Ind AS 115 while the component is on is refused; turn it off first.
  • Policy changes are audited. They appear under Settings > Audit log in the Money component; neither this tab nor the books page has a History button.
  • Your organization can rename the tab label, so your screen may use a different word.

Related

  • Revenue runsScreen

    The revenue runs (period closes) of the chosen books, the dialog that prepares a new draft run, and the scheduled rules that draft runs automatically.

  • Revenue runScreen

    One period close: what each booking and member offer recognises, the journals and cost moves it posts, the subjects it left out, and the actions to recompute, post, reverse or delete it.

  • Books overviewScreen

    The home page of one set of books: its company and settings, counts, fiscal years, and shortcuts to the chart of accounts, vouchers, reports and opening balances, with the actions to rename, deactivate or delete the books.

  • BooksScreen

    The list of every set of books in your organization, one per promoter company, with the actions to set up books for a company, open a set or delete one.

  • Contract balancesScreen

    The Ind AS 115 contract-balances disclosure per project over a period: contract liability, contract asset and contract acquisition costs rolled forward from the ledger, with the revenue recognised in the period and how much of it came out of the opening liability.

  • Component mappingsScreen

    Which ledger each charge component posts to in the chosen set of books (a main ledger, an optional second tax ledger, an optional cost centre and, for sale and tenant charges, the revenue treatment and contract liability ledger), and the action to copy template additions into the books.

  • LedgersScreen

    Every ledger of the chosen set of books, as a grouped tree or a flat list, with the actions to add ledgers and party ledgers, edit or retire them, and open a ledger's report.

  • DemandScreen

    One demand: the installments it bills, its amounts with GST, the expected TDS and what is payable in money, the receipts and TDS credits against it and how the money is placed on the charges, with the actions to edit, issue, cancel or delete it.

  • CommissionScreen

    One channel-partner commission: the partner, the brokerage with GST and TDS, the payouts against it, and the actions to edit, approve, cancel or delete it.

  • Budget CostScreen

    The project's (or a tower's) estimated total cost, effective-dated, that cost of sales shares across the saleable units and the cost method of over-time revenue recognition measures progress against.

  • StructureScreen

    Build and maintain a project's towers (wings), floors and units, generate them in bulk, and see every unit's status and designation at a glance.

  • OrganizationScreen

    Your organization's profile and policies: name and invitation expiry, the two-factor requirement, the AI connectors switch, the help-assistant recording switch, the project defaults every project inherits (RERA gate, estimate validity, the two chargeable areas, carpet area offered, revenue method and trigger) and the effective-dated rules: the RERA escrow share that splits every sweep of a project's collection account, TDS on sales and booking cancellation.

  • Construction StagesScreen

    Plan the project's construction stages (plinth, slabs, possession…) with their shares and dates, record commencement and completion, and keep the certificates and photos for each stage.

  • Booking overviewScreen

    A booking's home page: the applicant and unit, parking, dates, money summary, termsheet status and possession, with the buttons to edit the booking, see its history, jump to the opportunity or cancel it.

  • Cancel bookingScreen

    The four-step wizard that cancels a booking: it shows the demands and receipts that will be reversed, suggests the forfeiture and charges from the rule in force, sets the refund and posts everything in one go, releasing the unit and parking and marking the opportunity lost.

  • Audit logScreen

    The organization-wide change log: every create, change and delete, every sign-in (including refused ones), sign-out and downloaded file, with who did it, when, from where and what changed.

  • Revenue recognition: policy, point in time vs over time, and revenue runsConcept

    Each set of books carries an effective-dated revenue policy (framework, method, possession trigger, cost and brokerage treatments, judgement areas) chosen by the CA; a revenue run is the period close that computes every booking's and member offer's progress under it, recognises the catch-up revenue, cost of sales and brokerage, and posts the journals.

  • Possession: offer, handover, conveyance and the occupation certificateConcept

    Possession of a booked unit is recorded as three dates on the booking (possession offered, handed over, conveyance registered); the occupation certificate on the tower or project is what allows the offer, the handover marks the unit Sold, and the books' revenue policy names which of these dates is the moment sale revenue is recognised.

  • Contract liability, contract asset and the transaction priceConcept

    A booking's transaction price is the sum of its charges treated "With the unit"; while revenue is deferred, demands for those charges are credited to a contract liability (billed ahead of revenue), a revenue run debits it as revenue is recognised, and revenue recognised ahead of billing sits in the contract asset.

  • Contract acquisition costs (capitalised brokerage)Concept

    Under a revenue policy that capitalises the costs of obtaining a contract, an approved channel-partner commission is parked in Contract Acquisition Costs instead of brokerage expense and released to expense by each revenue run in step with the booking's revenue; possession expected within the practical-expedient months expenses it at once.

  • Cost of sales, cost budgets and inventory transferConcept

    Each revenue run moves the period's construction, rehab and borrowing cost from the expense ledgers into work-in-progress and land inventory, then charges every booking a share of the project's cost (its budget, else the cost inventoried so far) in step with its revenue progress, so revenue and its cost land in the same period.

  • Significant financing componentConcept

    An Ind AS 115 judgement: when buyers pay well ahead of possession the developer is effectively borrowing from them, so each revenue run accrues notional interest on every cleared receipt at the policy's rate, books it as interest expense against the contract liability, and adds it to the unit's price so it is recognised as revenue with the unit.

  • Rehab units as non-cash considerationConcept

    In a redevelopment the flats handed to society members are the price paid for the development rights; with the policy toggle on, the fair value of those rights is booked as land against a contract liability on the agreement date, and each member's offer earns its entitled-area share of that value as revenue when its allotted units are handed over.

  • Set the revenue policy and prepare the chart for itHow-to

    Record the CA's revenue recognition choices for a set of books as an effective-dated policy, set an organization-wide default or a project override where needed, and prepare the chart, cost centres, cost budgets and construction stages the revenue runs read.

  • Revenue policy cannot be changed or deleted: a posted run used it, or the settings do not fit the frameworkTroubleshooting

    A revenue policy that a posted revenue run has used stays as history and is changed by adding a new policy from a later date; a set of books always keeps one policy, two cannot start on the same date, and the significant financing component is only available under Ind AS 115 and needs a rate.

  • Remaining obligationScreen

    The Ind AS 115 disclosure of revenue still to come from what is already booked: each live booking and member offer's price less what the posted revenue runs have recognised, per project, banded by the financial year of the project's expected possession.

  • Project performanceScreen

    Revenue, cost of sales and margin per project for a period and to date, the booked price and how much of it is recognised, the cost budget against cost incurred and cost to complete, progress by stages and by cost, revenue by month, and the flags the CA needs to act on.