Is allowable expenditure of Interest on Vat ..?

This query is : Resolved

Kanakarao (Querist)
Follow

25 June 2011 Respected Experts please help me.... Our company (Pvt Limited) was paid huge amount as interest on Service Tax payble. Some one said that, Interest on Service Tax or Sales Tax and TDS is not allowable expenditure. Is it correct..? If yes, can you mention under which section of IT act is disallowing of the above payments. Please tell me... Thank u for all... RAJU.. 9705788628

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
Follow

26 June 2011 Interest on Service Tax and Sales Tax or Vat if is in compensatory in nature, means if payable due to the delay in depositing the amount of tax, is allowable as expenditure.
However, Interest on TDS is not allowable as TDS is a kind of income tax and income tax is not allowed as an expenditure.

Message likes : 3 times