01 July 2024
We are a Public Sector Undertaking (PSU) registered under the Companies Act, 1956. During the financial year 2019-20, we made a provision for pay arrears effective from January 2016. Subsequently, we have continued to make provisions against pay arrears every financial year. The total provision till date amounts to ₹21 crores. What are implication if reversing this provision in the financial year 2024-25. Income Tax & Penalties and Interest, specific disclosures need to be made in our financial statements regarding this reversal If provisions are of eligible nature and expenses are crystalized then tax implication and interest u/s 232 /233/234 ? please
02 July 2024
It will be considered as current year income. While making provisions it's not allowed as expenses under income tax, so while considering current year tax calculation reduce the income to this extent. no interest and penalty applicable for income tax. Disclosure required in the financial statements about the reversal.
CAclubindia
