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Discussion > Income Tax > Tax queries >

INTEREST ON DELAYED PAYMENT OF TAX - ALLOWABLE OR DISALLOWAB

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Practice

[ Scorecard : 87]
Posted On 21 February 2011 at 10:37 Report Abuse

CAN ANYONE PLEASE LET ME KNOW WHETHER INTEREST ON DELAYED PAYMENT

OF VAT/CST is allowable expenditure under the Income Tax Act, 1961.

Kindly let me know the same for penalty levied under any other law allowable or not.


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MD.Taufique
CA,CS

[ Scorecard : 308]
Posted On 21 February 2011 at 10:41

Friend penalty for delayed payment of tax and penalty levied under any other law is disallowable expenditure under income tax





Karan Teli
Life Is just an Illusion...!!

[ Scorecard : 4419]
Posted On 22 February 2011 at 00:12

penality are levied for not follwoing some rules and such exp incurred for delayed payment is not allowed as deduction under act......




CA.Naveen Kailkhuri
CA

[ Scorecard : 33]
Posted On 21 March 2011 at 15:34

Hi,
 

Please refer to Sec. 40(a)(ii) of IT Act, wherein it is specified that any Interest / Penalty / Fine etc for non payment or late payment of Income Tax  is not deductible. This principle equally applies on the late payment of CST / VAT. Hence, the INTEREST ON DELAYED PAYMENTOF VAT/CST is not allowed under IT Act.

Further, refer to Section 37 of the ITAct, specifies any expense as allowable only if "Not incurred for any purpose which is any offence or Prohibition by ANY Law".

Here, the term ANY is of great significance and hence applies to "CST / VAT" as well.

Now, the "Interest" in your case specifies that it is paid for something which is against provisions of Section 37.

Hence, the said interest will not be allowed as deduction for calculating Business Income.

regards



Total thanks : 1 times



AVIJIT
CA FINALIST

[ Scorecard : 366]
Posted On 21 March 2011 at 15:51

Agree with the above..



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