Account antry On disallowance

Accounting Entries 1652 views 11 replies

If exp. is disallowanced then what will be accounting entry?

Replies (11)

as per my opinion it is matter of income tax only.

if the expense is disallowed than it will simply be added in the income of assessee

yes, expenses will simply be added in the income as per income tax act and no accounting treatment will be done.

The impact of disallowance of expenditure will be on computation of Income not on books of accounts. Penality on such disallowances should be treated as expenditure in current FY in which demand will come. I hope you will get my point.

expenses which is disallowed is added in computation of total income  after that tax is calculated

If expenses are disallowed and this is a timing difference then deffered tax asset will arise.

please ractify me if i am wrong.....

yes i agree with gaurav and also d rest

 

If expenses are disallowed and this is a timing difference then deffered tax asset will arise.

please ractify me if i am wrong.....

 

 

 

This is permanent timing difference, this should not be considered for deferred tax asset/liabilities.

Disallowance of exp is matter related to income tax assessment. It shall have no impact on books of accounts. However if required tax provison for earlier year may be made in subsequent years on the basis of assessment.

dissalowance shall be considered only while computing income tax..

so while preparing ur P&L .. do include all ur expenses...

 

integration of companies act with income tax act is done with the help of deferred tax :)

If an expense is disallowed it simply gets added to ur income. It is the matter of calculation of Income Tax, No entry is made for it in booksof accounts

Originally posted by : Harpreet

The impact of disallowance of expenditure will be on computation of Income not on books of accounts. Penality on such disallowances should be treated as expenditure in current FY in which demand will come. I hope you will get my point.

Agree


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