Arka Bose (None) (313 Points)
21 October 2009In a Profit and loss A/c of a business of year ended 08-09,Rs 21000 of Provision for sales Tax has been shown in the debit side of the same.
Other information given: Sales Tax paid Rs 5000 on 5.6.09 and Rs 6000 paid on 1.9.09.
How much of sales Tax or Provision is to be allowed as expense for assessing the Income of the business(as per IT rules)
Yogesh Shah
(Managing Corporate Finance)
(1051 Points)
Replied 22 October 2009
Hi Arka,
In respect of P & L A/c. for year ended 31.03.2009, you can claim Rs. 21,000/- as a Provision for Sales Tax. Since, Sales Tax of Rs. 6,000/- & Rs. 5,000/- are paid in FY 2009-10, reverse provision in FY 2009-10 by Rs. 11,000/-
saranraj
(CA FINAL)
(419 Points)
Replied 22 October 2009
Dear Arka,
According to Income Tax Act 1961, sales tax is an allowable expenditure. But section 43B says that any tax, cess or duty to be paid under any law (required by VAT Act in your case) is allowed to be deducted upto the extent actually paid before the due date of filing the return of income. In your case, the due date seem to be 30th september 2009. Hence only deduction of Rs.11,000 is allowed as per Income tax act in the assessment year 2009-10.
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