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.
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.
CAclubindia
