Sec. 44 AB Audit

This query is : Resolved

Hussain (Querist)
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29 September 2009 Hi sirs ,

Is "VAT payable" or "VAT" covered u/s. 43B even if the same does not pass through profit and loss account.

IF applicable . what has to be done when there is a violation in payment of VAT u/s. 43B - does it mean that i have to offer VAT not paid within the due date as income in my b.I computation [Bec. the VAT does not pass through profit & Loss account][It is just a government due which is collected from customers and passed on to government after setting off VAT input and hence not the expense of the firm] - Kindly help me and elaborate on the aforesaid.

CA SANJAY MUKHERJEE

CA SANJAY MUKHERJEE (Expert)
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30 September 2009 Dear Mr. Hussain,

Sec 43 B says that some statutory expenses ( tax ,duty,cess and fees) are deductible only on payment basis.

And this applicable only if taxpayer follows mercantile sysyem of accounting.

Which means that expenses are booked in accounts as it become due.

In your case VAT or VAT payable does not pass through P.L A/C, I have failed to understand that.

In Income Tax return you have to show Service Tax,VAT,Excise collected through your sales in ITR 6 P.L A/C in Point No. 2 and paid or payable in point No. 34.

So for Income tax purpose you have to take the Vat into account both collection and paid or payable to Govt and then to add back the unpaid portion under sec 43B in the sheet called Other information point number 11.