If you're running a SaaS in India and offering annual plans, there's something easy to miss early on.
GST and revenue don't follow the same timeline.
Simple example. You sell a ₹12,000 annual plan. Cash comes in upfront. But you've only earned ₹1,000 in month one. The remaining ₹11,000 sits as deferred revenue on your balance sheet until the service is actually delivered.
Here's where it gets confusing. GST in most cases is due when the invoice is raised or payment is received. So you're paying tax on the full ₹12,000 in month one, while only recognizing ₹1,000 as revenue.
Two completely different timelines living inside the same transaction.
This starts causing real problems when founders look at revenue numbers and they don't match cash. Or when finance and product are pulling different figures for the same period. Or when a CA or investor asks for a clean breakdown and nothing reconciles properly.
For us the concept wasn't hard to grasp. Tracking it properly across hundreds of subscriptions was the actual problem. Spreadsheets held up until around 200 annual subscribers. After that reconciliation was taking hours every month and errors were creeping in.
If you're running a SaaS in India and offering annual plans, there's something easy to miss early on.
GST and revenue don't follow the same timeline.
Simple example. You sell a ₹12,000 annual plan. Cash comes in upfront. But you've only earned ₹1,000 in month one. The remaining ₹11,000 sits as deferred revenue on your balance sheet until the service is actually delivered.
Now here's where it gets confusing. GST in most cases is due when the invoice is raised or payment is received. So you're paying tax on the full ₹12,000 in month one, while only recognizing ₹1,000 as revenue.
Two completely different timelines living inside the same transaction.
This starts causing real problems when founders look at revenue numbers and they don't match cash. Or when finance and product are pulling different figures for the same period. Or when a CA or investor asks for a clean breakdown and nothing reconciles properly.
For us the concept wasn't hard to grasp. Tracking it properly across hundreds of subscriptions was the actual problem. Spreadsheets held up until around 200 annual subscribers. After that reconciliation was taking hours every month and errors were creeping in.
Trying to understand how others are handling this. Are you tracking deferred revenue and GST separately in your accounting tool or have you moved to something that handles both together? And if you've been through due diligence or a statutory audit, did this come up?