01 — Concept
What Makes Subscription Revenue Accounting Different?
Unlike a one-time product sale, a subscription is a promise to deliver service over a future period. When a customer pays upfront for a 12-month plan, you have not yet "earned" the revenue — the cash sits as a liability (Deferred Revenue) until each month's service is delivered. This creates a permanent gap between cash inflow and revenue recognition, requiring systematic deferral and release entries every single month.
2
Entries required — at receipt (defer) and monthly (recognise)
1/12
Revenue recognised each month for annual subscription (straight-line)
18%
GST rate applicable on most SaaS / software subscription services in India
115
Ind AS 115 governs subscription revenue recognition — performance obligation over time
📌 The Core Accounting Principle: Under Ind AS 115 / AS 9, subscription revenue is recognised as the performance obligation (service delivery) is satisfied — i.e., over time. Cash received in advance is a contract liability (Deferred Revenue / Unearned Revenue A/c) in the balance sheet. It is released to the income statement month by month as the service is rendered.
✅ GST Timing Rule for Subscriptions: GST becomes payable at the time of invoice issuance or receipt of payment, whichever is earlier — regardless of when revenue is recognised. So even if you defer ₹11,800 of subscription receipts, you must immediately credit GST Payable A/c with the full GST component (₹1,800) at the time of receipt. GST timing ≠ Revenue recognition timing.
02 — Revenue Flow
The Subscription Revenue Flow — 5 Stages
Understanding how subscription revenue moves from cash receipt to the income statement is the foundation of subscription accounting. Each stage creates a distinct accounting entry.
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STAGE 01
Customer Subscribes & Pays
Customer pays upfront (monthly or annually). Cash / gateway settles to your bank. DO NOT credit Revenue yet — service has not been delivered.
→
STAGE 02
Invoice Issued + GST Collected
Subscription invoice is raised. GST is collected and credited to GST Payable A/c immediately — regardless of revenue deferral. Issue GST-compliant tax invoice.
→
STAGE 03
Record as Deferred Revenue
Net subscription value (ex-GST) is credited to Deferred Revenue A/c — a current liability. This represents the unearned obligation still owed to the customer.
→
STAGE 04
Monthly Revenue Release
At month-end, recognise 1 month's earned service: Dr Deferred Revenue A/c and Cr Subscription Revenue A/c. Repeat each month until subscription period ends.
STAGE 05
Auto-Renewal / Expiry
At end of period: Deferred Revenue balance = ₹0 (fully recognised). On auto-renewal, restart the cycle. On cancellation: refund remaining deferred balance and reverse GST.
03 — Case Study: Monthly Subscription Plan
Case Study 1: Monthly Subscription Plan (SaaS)
A monthly subscription is the simplest scenario — the billing cycle and service period align perfectly. Revenue is recognised in the same month as receipt. However, if the billing date differs from month-end, a pro-rata accrual entry may be needed.
FACTS OF THE CASE
Zerolev SaaS — ₹1,000/month Subscription
A customer subscribes to Zerolev's project management software at ₹1,000/month + GST @18% = ₹1,180. Payment is collected on the 1st of each month via Razorpay auto-debit. The subscription period is calendar month (1st to last day). Invoice is raised on the 1st of each month.
Entry 1A: On 1st April — Receive Monthly Subscription PaymentMonthly Plan — Payment Receipt
| Account | Dr/Cr | Debit (₹) | Credit (₹) |
|---|---|---|---|
| Bank A/c / Payment Gateway Receivable A/c | Dr | 1,180 | — |
| To Subscription Revenue A/c | Cr | — | 1,000 |
| To GST Payable A/c (Output — IGST/CGST+SGST) | Cr | — | 180 |
| Total | 1,180 | 1,180 | |
Being monthly subscription received for April. For monthly plans, revenue is recognised immediately (billing period = service period). GST ₹180 @18% credited to GST Payable. No deferral needed since entire month's service is being billed for. Repeat this entry on 1st of each month for each renewal.
🔑 Monthly vs Annual — When to Defer? For monthly subscriptions billed at start of month, revenue is fully earned within the same accounting month — no deferral needed. However, if a monthly subscription is billed on (say) 15th March and your accounting period closes on 31st March, you must recognise only 15 days of revenue in March and defer 15 days (₹500 approx.) to April. For annual subscriptions paid upfront, full deferral and monthly release is always required.
04 — Case Study: Annual Subscription Plan (Paid Upfront)
Case Study 2: Annual Subscription Paid Upfront — Deferred Revenue
Annual subscriptions paid upfront are the most common scenario requiring deferred revenue accounting. The customer pays for 12 months in advance, but revenue can only be recognised as each month's service is delivered. This is where Ind AS 115's "performance obligation satisfied over time" principle directly applies.
FACTS OF THE CASE
Zerolev Pro — ₹12,000/year Annual Subscription
A customer pays ₹12,000 for an annual subscription on 1st April 2025. GST @18% = ₹2,160. Total invoice value = ₹14,160. Subscription period: 1 April 2025 to 31 March 2026. Revenue earned per month = ₹12,000 ÷ 12 = ₹1,000/month. Payment received via Razorpay; gateway charges 2% = ₹240 + GST on fee ₹43 = ₹283 total.
Entry 2A: 1st April — Receipt of Annual Subscription (Full Deferral)Annual Plan — Cash Receipt & Deferred Revenue
| Account | Dr/Cr | Debit (₹) | Credit (₹) |
|---|---|---|---|
| Payment Gateway Receivable A/c (Razorpay) | Dr | 14,160 | — |
| To Deferred Revenue A/c (Unearned Subscription) | Cr | — | 12,000 |
| To GST Payable A/c (Output — IGST @18%) | Cr | — | 2,160 |
| Total | 14,160 | 14,160 | |
Being annual subscription of ₹12,000 received from customer. Full net amount ₹12,000 deferred (Deferred Revenue A/c = current liability). GST ₹2,160 payable immediately (GST timing is receipt date, not recognition date). Gateway Receivable A/c to be cleared on settlement.
Entry 2B: On Gateway Settlement — Clear Receivable, Record CommissionGateway Settlement — Gross Method
| Account | Dr/Cr | Debit (₹) | Credit (₹) |
|---|---|---|---|
| Bank A/c | Dr | 13,877 | — |
| Payment Gateway Commission Expense A/c | Dr | 240 | — |
| Input Tax Credit A/c (GST on Gateway Fee) | Dr | 43 | — |
| To Payment Gateway Receivable A/c (Razorpay) | Cr | — | 14,160 |
| Total | 14,160 | 14,160 | |
Being Razorpay settlement received. Bank ₹13,877 (net of 2% commission ₹240 + GST on commission ₹43). Commission is a P&L expense. ITC of ₹43 claimable in GSTR-3B. Gateway Receivable cleared.
Entry 2C: 30th April (Month-End) — Recognise 1 Month's Earned RevenueMonthly Revenue Release — Ind AS 115
| Account | Dr/Cr | Debit (₹) | Credit (₹) |
|---|---|---|---|
| Deferred Revenue A/c (Unearned Subscription) | Dr | 1,000 | — |
| To Subscription Revenue A/c | Cr | — | 1,000 |
| Total | 1,000 | 1,000 | |
Being 1/12 of annual subscription recognised as earned revenue for April (₹12,000 ÷ 12 = ₹1,000). Deferred Revenue A/c reduces from ₹12,000 to ₹11,000. This entry is repeated on the last day of each month for 12 months until Deferred Revenue = ₹0. No additional GST entry — GST was fully booked on receipt.
✅ Deferred Revenue Schedule (Annual ₹12,000 Plan): April: Recognise ₹1,000 → Balance ₹11,000 | May: Recognise ₹1,000 → Balance ₹10,000 | June through February: Recognise ₹1,000/month → Balance reduces by ₹1,000 each month | March (final month): Recognise ₹1,000 → Balance ₹0. Total recognised = ₹12,000. Deferred Revenue A/c is fully cleared at end of subscription period.
| Month | Opening Deferred Revenue (₹) | Revenue Recognised (₹) | Closing Deferred Revenue (₹) | Balance Sheet Treatment |
|---|---|---|---|---|
| April 2025 | 12,000 | 1,000 | 11,000 | Current Liability |
| May 2025 | 11,000 | 1,000 | 10,000 | Current Liability |
| June 2025 | 10,000 | 1,000 | 9,000 | Current Liability |
| July – Oct 2025 | 9,000 → 5,000 | 1,000/month | 5,000 → 1,000 | Current Liability |
| March 2026 (final) | 1,000 | 1,000 | 0 | Fully Recognised |
| Total (12 months) | — | 12,000 | 0 | Revenue fully earned |
05 — Case Study: Subscription Cancellation with Refund
Case Study 3: Mid-Period Subscription Cancellation & Refund
When a subscriber cancels mid-period (especially for annual plans), the accounting must reverse the unearned portion of Deferred Revenue, reverse the GST on the refunded amount, and record the cash outflow. The complexity depends on your refund policy (pro-rata vs. no-refund).
FACTS OF THE CASE
Zerolev Pro — Customer Cancels After 3 Months
Customer purchased a ₹12,000 annual plan on 1st April (GST ₹2,160 paid). Uses service for April, May, June (3 months). Cancels on 30th June. Company policy: pro-rata refund for unused months. Revenue earned = 3 months × ₹1,000 = ₹3,000. Unearned balance = ₹9,000 (9 months remaining). Refund = ₹9,000 + GST refund ₹1,620 = ₹10,620 total refund.
Entry 3A: At Cancellation — Reverse Unearned Deferred Revenue & GSTCancellation — Deferred Revenue Reversal
| Account | Dr/Cr | Debit (₹) | Credit (₹) |
|---|---|---|---|
| Deferred Revenue A/c (Unearned Subscription) | Dr | 9,000 | — |
| GST Payable A/c (Reverse Output GST on Refunded Amount) | Dr | 1,620 | — |
| To Customer Refund Payable A/c | Cr | — | 10,620 |
| Total | 10,620 | 10,620 | |
Being cancellation of annual subscription after 3 months. Deferred Revenue ₹9,000 reversed (9 unused months × ₹1,000). GST reversed on refund portion: ₹9,000 × 18% = ₹1,620. Issue Credit Note in GSTR-1 for the GST reversal. Customer Refund Payable A/c is a current liability.
Entry 3B: Processing Refund via Payment GatewayRefund Payment — Cash Outflow
| Account | Dr/Cr | Debit (₹) | Credit (₹) |
|---|---|---|---|
| Customer Refund Payable A/c | Dr | 10,620 | — |
| To Bank A/c / Payment Gateway A/c | Cr | — | 10,620 |
| Total | 10,620 | 10,620 | |
Being refund of ₹10,620 processed to customer's original payment method. Customer Refund Payable cleared. Note: 3 months of revenue ₹3,000 (April–June) + GST on earned revenue ₹540 remain as income — only the unearned portion is refunded.
⚠️ No-Refund Policy Cancellation: If your subscription terms are non-refundable, cancellation accounting is simpler. On cancellation, transfer the entire remaining Deferred Revenue balance directly to Revenue: Dr Deferred Revenue A/c | Cr Subscription Revenue A/c (full unearned balance). No GST reversal is needed since no refund is issued. However, your terms must explicitly state non-refundability, and this must be disclosed in your Ind AS 115 revenue recognition policy.
06 — Case Study: Plan Upgrade & Downgrade
Case Study 4: Mid-Period Plan Upgrade / Downgrade
Upgrades and downgrades mid-subscription period require pro-rata calculations. The key is to calculate the unused credit from the current plan and apply it to the new plan, then account for the net differential.
01
CALCULATE CREDIT
Pro-Rata Credit for Unused Period
Calculate the unused value of the current plan: (Remaining days ÷ Total days) × Net subscription price. This is the credit available against the new plan.
02
NEW PLAN COST
Calculate Cost of New Plan for Remaining Period
New plan's daily rate × Remaining days = cost of new plan for the remaining period. This is what the customer needs to pay for the upgraded plan.
03
NET DIFFERENTIAL
Charge / Credit the Difference
For upgrade: Customer pays the shortfall (New cost − Credit). For downgrade: Issue a credit note / refund for the excess (Credit − New cost), or carry forward as credit for next renewal.
04
ADJUST DEFERRED
Rebook Deferred Revenue at New Rate
Close the old Deferred Revenue balance and rebook it at the new plan's rate for remaining months. Monthly release entries will now use the new plan's per-month value.
FACTS OF THE CASE
Zerolev Pro → Zerolev Enterprise — Upgrade After 3 Months
Customer on ₹12,000/year plan upgrades to ₹24,000/year Enterprise plan after 3 months (April–June used). Remaining period: 9 months. Credit from old plan: ₹9,000 (9 × ₹1,000). New plan cost for 9 months: ₹24,000 ÷ 12 × 9 = ₹18,000. Top-up to pay: ₹18,000 − ₹9,000 = ₹9,000 + GST ₹1,620 = ₹10,620 additional payment.
Entry 4A: On Upgrade — Rebook Deferred Revenue & Collect Top-UpPlan Upgrade — Differential Billing
| Account | Dr/Cr | Debit (₹) | Credit (₹) |
|---|---|---|---|
| Deferred Revenue A/c (Old Plan — Rebook) | Dr | 9,000 | — |
| Bank A/c / Gateway Receivable A/c (Top-Up + GST) | Dr | 10,620 | — |
| To Deferred Revenue A/c (New Enterprise Plan — 9 months) | Cr | — | 18,000 |
| To GST Payable A/c (Output Tax on Top-Up Invoice) | Cr | — | 1,620 |
| Total | 19,620 | 19,620 | |
Being plan upgrade from Pro to Enterprise. Old Deferred Revenue ₹9,000 applied as credit. Top-up ₹9,000 + GST ₹1,620 collected via bank. New Deferred Revenue ₹18,000 created for 9 remaining months (₹2,000/month). Issue fresh tax invoice for the top-up amount. Monthly release entry going forward = ₹2,000/month (₹18,000 ÷ 9).
07 — TDS on Subscription Payments
TDS on Subscription Payments from Business Customers
When business customers (companies, LLPs, firms) pay your subscription fee, they may be required to deduct TDS under Section 194J (Fees for Professional/Technical Services) @10% on the subscription value (excluding GST). The deducted TDS is a receivable for you — not an expense.
| Step | What Happens | Your Accounting Entry | Compliance Action |
|---|---|---|---|
| 1 | Business customer deducts TDS @10% before paying subscription | Dr Bank A/c (net) + Dr TDS Receivable A/c | Cr Subscription Revenue / Deferred Revenue + Cr GST Payable | Customer must deposit TDS with Govt and issue Form 16A |
| 2 | Customer deposits TDS with Govt and files TDS return (Form 26Q) | No new entry in your books — TDS Receivable remains as current asset | Verify TDS in Form 26AS / AIS on Income Tax portal |
| 3 | At time of ITR filing | Claim TDS credit: Dr Income Tax Payable | Cr TDS Receivable A/c | File ITR and claim TDS credit to offset income tax liability |
| 4 | TDS refund (if TDS exceeds tax payable) | Dr Bank A/c | Cr TDS Receivable A/c | Income Tax Dept processes refund after ITR processing |
Entry 5A: Business Customer Pays Annual Subscription Net of TDSTDS Deduction — Section 194J
| Account | Dr/Cr | Debit (₹) | Credit (₹) |
|---|---|---|---|
| Bank A/c (Net received — ₹14,160 − ₹1,200 TDS) | Dr | 12,960 | — |
| TDS Receivable A/c (10% on ₹12,000 subscription) | Dr | 1,200 | — |
| To Deferred Revenue A/c (Annual Subscription) | Cr | — | 12,000 |
| To GST Payable A/c (Output Tax @18%) | Cr | — | 2,160 |
| Total | 14,160 | 14,160 | |
Being annual subscription receipt from corporate customer. TDS ₹1,200 (10% on ₹12,000 ex-GST) deducted by customer — TDS Receivable A/c is a current asset (claim in ITR). Bank receipt = ₹14,160 − ₹1,200 = ₹12,960. Revenue deferred as usual. Verify TDS against Form 26AS before ITR filing.
⚠️ TDS is on Subscription Base, NOT on GST: TDS under Section 194J is deducted on the subscription fee excluding GST (i.e., on ₹12,000, not ₹14,160). GST is explicitly excluded from the TDS base as per CBDT circular. If a customer deducts TDS on the GST-inclusive amount, raise a correction request. Verify all TDS credits in Form 26AS / AIS on the Income Tax portal at the time of filing ITR.
08 — Month-End Subscription Revenue Reconciliation
Month-End Subscription Revenue Reconciliation Framework
Subscription accounting requires four simultaneous reconciliations at month-end — the subscription management system vs. books, deferred revenue balance check, GST output vs. GSTR-1, and TDS receivable verification.
R1
REVENUE RECON
Books vs Subscription System
Total subscription revenue in P&L must equal: (Active subscribers × per-month plan value) for the month. New subscribers added + renewals − cancellations = net MRR (Monthly Recurring Revenue) per books.
R2
DEFERRED RECON
Deferred Revenue Balance Check
Closing Deferred Revenue balance in books must equal the sum of all active annual subscriptions × remaining unrecognised months. Any variance = missed recognition entry or incorrectly booked cancellation.
R3
GST RECON
GSTR-1 vs Subscription Invoices
Total taxable value in GSTR-1 = Total subscription invoices raised (not revenue recognised). Cancellation credit notes in GSTR-1 must match cancelled subscription GST reversals in books. GST is cash/invoice basis, not accrual.
R4
TDS RECON
TDS Receivable vs Form 26AS
TDS Receivable balance in books must match TDS reflected in Form 26AS / AIS for the year. Unmatched TDS = customer has not deposited or filed — follow up for Form 16A. Reconcile before ITR filing deadline.
Summary — All Subscription Revenue Journal Entries
Quick Reference — All Subscription Revenue Journal Entries
| Transaction | Debit | Credit | Key Note |
|---|---|---|---|
| Monthly subscription received (same-period) | Bank / Gateway Receivable A/c | Subscription Revenue A/c + GST Payable A/c | No deferral for monthly plans billed in the same accounting period |
| Annual subscription received (upfront) | Bank / Gateway Receivable A/c | Deferred Revenue A/c + GST Payable A/c | Full amount deferred; GST booked immediately |
| Monthly revenue recognition (month-end) | Deferred Revenue A/c (1/12 of annual) | Subscription Revenue A/c | Repeat 12 times; no GST entry at recognition stage |
| Gateway settlement on subscription payment | Bank A/c + Commission Expense + ITC | Payment Gateway Receivable A/c | Same gross method as online sales — ITC claimable on gateway GST invoice |
| Subscription cancellation (pro-rata refund) | Deferred Revenue A/c + GST Payable A/c | Customer Refund Payable A/c | Reverse unearned deferred revenue + GST; issue credit note in GSTR-1 |
| Refund paid to cancelled subscriber | Customer Refund Payable A/c | Bank A/c | Clears the refund liability |
| Plan upgrade (top-up collected) | Deferred Revenue (old) + Bank (top-up + GST) | Deferred Revenue (new plan) + GST Payable | Old deferred credit + top-up payment = new plan deferred value |
| Plan downgrade (credit note issued) | Deferred Revenue A/c (old plan) | Deferred Revenue (new plan) + Customer Refund Payable + GST Payable (reversal) | Issue credit note for downgrade difference; rebook at new rate |
| Subscription received from corporate (TDS deducted) | Bank A/c (net) + TDS Receivable A/c | Deferred Revenue A/c + GST Payable A/c | TDS = current asset; claim credit in ITR |
| TDS credit claimed in ITR | Income Tax Payable A/c | TDS Receivable A/c | Offset against income tax liability at year-end |
| Non-refundable cancellation (no refund policy) | Deferred Revenue A/c (unearned balance) | Subscription Revenue A/c | Accelerate revenue recognition; no GST reversal since no refund issued |
09 — Interactive Classroom
Accounts School — Subscription Revenue Interactive Classroom
Step into the virtual accounting classroom. Navigate through 6 animated lessons covering subscription revenue accounting — from the basic deferred revenue entry to TDS, cancellations, upgrades, and month-end reconciliation — with live quizzes, teacher narration, and interactive notes.
🔄
Accounts School
SUBSCRIPTION REVENUE ACCOUNTING · DEFERRED REVENUE · ZEROLEV
Step into a virtual classroom! Learn subscription revenue journal entries, deferred revenue, GST on subscriptions, cancellations, upgrades, TDS, and reconciliation with an animated teacher, interactive blackboard, live quizzes, and voice narration.
🔄
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SUBSCRIPTION REVENUE ACCOUNTING
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10 — Frequently Asked Questions
Frequently Asked Questions — Subscription Revenue Accounting
What is the journal entry for subscription revenue received in advance?
When a customer pays for an annual subscription upfront: Step 1 — At Receipt: Dr Bank / Gateway Receivable A/c (full amount including GST) | Cr Deferred Revenue A/c (net subscription, ex-GST) | Cr GST Payable A/c (GST amount). GST is payable immediately on receipt of payment, regardless of when revenue is recognised. Step 2 — Each Month-End: Dr Deferred Revenue A/c (1/12 of annual subscription) | Cr Subscription Revenue A/c. Repeat for 12 months. After 12 entries, Deferred Revenue A/c balance = ₹0 and the full subscription value has been recognised as revenue.
When is subscription revenue recognised under Ind AS 115?
Under Ind AS 115, subscription revenue is recognised as the performance obligation is satisfied over time. For a 12-month subscription plan, this means: (a) The service is delivered continuously each month; (b) Revenue is recognised monthly (1/12 of annual fee per month) on a straight-line basis; (c) The unrecognised balance is classified as a Contract Liability (Deferred Revenue) in the balance sheet. Revenue cannot be recognised upfront even if the entire year's payment is received on Day 1. The entity must demonstrate that it is satisfying its performance obligation progressively (month-by-month service delivery) before recognising revenue.
How is GST accounted for on subscription services in India?
GST on subscription services follows the time of supply rule under Section 13 of the CGST Act. For subscriptions: (a) GST is payable at the earlier of — date of invoice issuance OR date of receipt of payment. (b) This means even if you defer subscription revenue over 12 months, GST is payable on the full invoice amount in Month 1. (c) GST rate: 18% for software/SaaS subscriptions, 12% for some service categories — verify based on SAC code. (d) Declare in GSTR-1 at time of invoicing (not at time of recognition). (e) For B2B subscriptions, issue GST-compliant tax invoice with buyer's GSTIN, HSN/SAC code, and all mandatory particulars.
What is the journal entry for subscription cancellation?
The cancellation entry depends on your refund policy. For pro-rata refund cancellations: (1) Calculate unused months and unearned revenue: Unearned = (Remaining months ÷ Total months) × Net subscription price. (2) Entry: Dr Deferred Revenue A/c (unearned amount) + Dr GST Payable A/c (GST on refunded portion) | Cr Customer Refund Payable A/c (total refund). (3) On refund payment: Dr Customer Refund Payable A/c | Cr Bank A/c. (4) Issue Credit Note in GSTR-1 to reverse GST on the refunded portion. For no-refund cancellations: Dr Deferred Revenue A/c (unearned balance) | Cr Subscription Revenue A/c. No GST reversal needed. Revenue is immediately recognised since the obligation is discharged.
Is TDS applicable on subscription payments in India?
TDS may apply on subscription payments when the payer is a business entity (company, LLP, firm, AOP, etc.) and the subscription qualifies as fees for technical services under Section 194J of the Income Tax Act. Rate: 10% on the subscription fee excluding GST. Note: (a) Individual/HUF payers are exempt from TDS deduction obligation unless subject to tax audit. (b) TDS is deducted at source (i.e., the customer pays you net of TDS) — TDS Receivable is a current asset in your books. (c) Verify TDS credits in Form 26AS / AIS on the Income Tax portal. (d) TDS is claimed as credit against income tax liability at the time of filing ITR. (e) If TDS exceeds tax payable, the excess is refunded by the Income Tax Department.
How do you account for a subscription plan upgrade or downgrade?
For upgrades mid-period: (1) Calculate the pro-rata credit for the remaining unused period of the old plan: (Remaining days ÷ Total plan days) × Old plan price. (2) Calculate the new plan cost for the remaining period: (Remaining days ÷ New plan total days) × New plan price. (3) Collect the differential from the customer (new cost − credit) + GST on differential. (4) Journal entry: Dr Deferred Revenue (old) + Dr Bank/Gateway (top-up + GST) | Cr Deferred Revenue (new plan for remaining period) + Cr GST Payable (on top-up). For downgrades: The credit exceeds new cost — issue a credit note / refund the excess to the customer or carry it forward as a credit balance for next renewal. The principle is identical: close old deferred revenue and rebook at the new plan's rate.
What is deferred revenue and where does it appear on the balance sheet?
Deferred Revenue (also called Unearned Revenue or Contract Liability under Ind AS 115) is cash collected from customers for a service that has not yet been delivered. It appears as a Current Liability in the balance sheet since the obligation to deliver the service (or refund the money) exists. Classification: (a) If the entire subscription will be delivered within 12 months → classify under Current Liabilities (current portion of deferred revenue). (b) If any portion of the subscription extends beyond 12 months from the balance sheet date → that portion is classified under Non-Current Liabilities. In practice, most monthly and annual subscription businesses classify their full deferred revenue as current. Disclose the movement in deferred revenue in the notes to financial statements under Ind AS 115 disclosures.