Bank guarantee fees
This query is : Resolved
04 June 2012
The assessee is manufaturer and selling goods to govt on allotment of Tenor. As per terms of Tendor allotment they have to provide bank guarantee for 3 years.
please suggest the accounting of Bank Guarantee Fees Paid for 3 years to Bank with respective section or rules under Income Tax.
please suggest the accounting of Bank Guarantee Fees Paid for 3 years to Bank with respective section or rules under Income Tax.
04 June 2012
Bank Guarntee fees is sort of bank charges. you can book it under Finance/Bank Charges.
The same is deductible expense.
Bank Guarantee given has to be shown as "Contingent Liability" which is a off balance sheet item and disclosed by way of notes.
The same is deductible expense.
Bank Guarantee given has to be shown as "Contingent Liability" which is a off balance sheet item and disclosed by way of notes.
04 June 2012
Whether Bank Guarantee Fees Paid for 3 years to be allowed in the year of payment wholly or in 3 years under income tax
05 June 2012
Under income tax it will be allowed in the year of exenditure itself.
For Accounting purpose, you can show fees for 2 years as prepaid expense and fees for 1 year as current year expense.
For Accounting purpose, you can show fees for 2 years as prepaid expense and fees for 1 year as current year expense.
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