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Section 43b of income tax act

Sampada Jadhav (Service) (43 Points)

02 October 2016

I have a client who has collected Service Tax. The said hs been paid in the next year. So for the current year, the said service tax is in the credit of Profit and Loss account and is also appearing in the Balance Sheet as a liability. So while computing the income tax return should I add back the amount of Service tax? Will it be disallowed?

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3 Replies

Akash (CA Final (2nd Group Pending)) (876 Points)
Replied 02 October 2016

Amount appearing in Balance sheet will be disallowed. Any Amount previously disallowed if paid in Current Year that should be allowed.

CA Rahul Mor (Chartered Accountant) (173 Points)
Replied 03 October 2016

Service Tax is not a income it is just a liability which will be paid to the goverment. your client received ST which is not Income of your client is it is shown in P&L therefore you should reduce the amount which is pertaint to ST and calculate the tax.

CA Goutam Sharma (Chartered Accountant in Practice) (468 Points)
Replied 06 October 2016

yes ..CA Rahul is correct.. how can service tax collected be part of revenue or profit and loss account. its only a libility and nothing else.

43b suggest addition of Tax Unpaid dyring computation. but it does not means that you will take service tax collected to profit and loss account. it leads to inflation of book profit..