1.Provision For Future Sales Tax liability is debited to P&l , will be allowed deduction
2.Please help to understand the allowability of other similar expenses ( Legal to be more presise say sales tax,excise ,customs)
6 Replies
Ratan Deep Saxena
(Asstt Manager (Accounts & Finance))
(2998 Points)
Replied 10 April 2010
Provision for sales tax liability will not be allowed as deduction. Such expenses shall be allowed in the year in which it actually paid.
regards,
ratan
Ratan Deep Saxena
(Asstt Manager (Accounts & Finance))
(2998 Points)
Replied 10 April 2010
Refer Section 43 B in this respect which says some expenses are allowed on payment basis. Ex, sales tax etc.
regards,
ratan
PRAVEEN KUMAR
(MBA (Finance) B.Com.(P))
(3443 Points)
Replied 10 April 2010
Yes, Nitn,
Mr. Ratan is right here.... Provision for sales tax liability will not be allowed as deduction
Aditya Maheshwari
(CA in Practice)
(35867 Points)
Replied 10 April 2010
Yes as per Section 43B any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in Section 28 of that previous year in which such sum is actually paid by him provided that nothing contained in this section shall apply in relation to any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return.
So if the liability is provided for and not paid till the due date of filing return the same will not be allowed as a deduction from business income
SUDHIR & PRADEEP JI
(CA FINAL+LLB + DISA)
(2299 Points)
Replied 11 April 2010
Provision for sales tax liability will not be allowed as deduction. Such expenses shall be allowed in the year in which it actually paid. so. that provision are not allowed
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