Pankaj Arora (Learner) (3134 Points)
01 December 2011
Dear All
As on 31.03.11 we have service tax and sales tax liability is around 10 lacs and we have paid sales tax and service tax during the year is 60 lacs . can we claim this 60 lacs as an indirect expense?
I am confused because if we register with respective department for sales and service tax than we can adjust with our liability and when we are not register under sales and service tax how to claim this as an expense?
CA Ankur Goel
(sr. executive)
(133 Points)
Replied 01 December 2011
If v r adjusting these taxes against the dues under the respective acts,
then v can't claim them as expenses.
On other hand, if v r consider them as part of the cost,
then v can claim them as expenses.
RANJAN MEHTA
(Chartered Accountant)
(589 Points)
Replied 01 December 2011
first of all you should eleborate how have you made tha payment without registering.
there are two methods of accounting.
1. book the payment as expenditure and all the receipts/recovery from customers as Sales/receipts.
2. open an account book all the payments, rceipts Cenvat in that account. if every thing goes right end balance should be ZERO.
the Income Tax act recognises taxes as expenditure. you can claim tax as expenditure and even in case of Sales Tax the Interest on Delayed Payment of Tax can also be claimed as expenditure. but all these are subject to sec. 43B, which says that taxes to be allowed only on payment basis. thus in case you claim the tax as expendtiure then your liability of Rs. 10 lacs could not be allowed as expenditure in the same year it will be allowed only if the payment has been made before the due date of filing the return.
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