When to make provision,can provision be made outstanding liabilities
2 Replies
sreenath
(Articled Assistant)
(219 Points)
Replied 12 August 2010
Hi
Provisions Can be made at the Year end for the Outstanding Expenses Like Salaries for The Month of March are Likely to be Paid in April So March Month Salary Provision Can Be Provided at 31/03 Rent, Audit Fee, Professional Charges Etc . And for Liabilities Also Suppose Your Taken a Loan for Business Expansion the Bank Will Charge Interest Every Month Without Your Paying any Instalments from your Side. The Liability Will Get Increased. If you are not Provided any Provision The Liability is not Matched with the Bank Loan Statement so you should must provide the Provision for Outstanding Interest also. But As per Income Tax Act 1961 Section 43B The interest Will be Disallowed.
ajithasai
(m.ajitha)
(95 Points)
Replied 13 August 2010
hi
provisions is year end of the out standing expences. And for Liabilities Also Suppose Your Taken a Loan for Business Expansion the Bank Will Charge Interest Every Month Without Your Paying any Instalments from your Side.
thanks at all
regards,
phe9oxis,
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