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RTO & INSURANCE CHARGES

Deepak Tapse (Accounts Manager - Taxation) (1771 Points)

01 July 2009

RTO & Insurance charges for New Car is to be capatilised or we can debit to P&L. For this any AS is available. Pl inform the same.

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8 Replies

(Guest)

Hi Deepak

Both the charges to be routed through P/L a/c and these charges don't give any benefit of enduring nature as per AS 10 "Accounting for Fixed assets"

Kalpesh (Accountts & Income Tax) (338 Points)
Replied 01 July 2009

Sir,

RTO is one time tax and we can utilise it for next 15 years. cant we transfer RTO in capital assets?

(Guest)

Oh... RTO can be capitalised. sorry but didnt know of its nature.

praveen (Chartered Accountant) (6971 Points)
Replied 01 July 2009

boss it is simple

expenses having long term benefits are capitalised and those which are recurring or whoose utility is less than or equal to an year shall be routed to profit and loss account.

Yogesh Shah (Managing Corporate Finance) (1051 Points)
Replied 01 July 2009

Hi dude,

I think, RTO tax should be capitalized & Insurance Charges should be charged to P&L A/c. (subject to - Car is used for a business purpose.)

RAMANJU (here to updating the knowledge) (485 Points)
Replied 01 July 2009

All kind of expenditures incurred in bringing the asset to put into use should be capitalised. In your case, Road Tax and Insurance charges incurred before the car put into use and the insurance charges also ( first time insurance)should be capitalised. Refer AS-10, "Accounting for Fixed Assets".