Accounting head for donation

This query is : Resolved

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Discussion explains donation accounting in a partnership firm. If firm claims deduction under section 80G, record as donation expense. If partner claims deduction personally, treat it as drawings in books.

Querist : Anonymous

Querist : Anonymous (Querist)

28 December 2011 we are partnership firm, and one of the partner had given donation to aids cure center pls tell me under which head should i put donation, one of the accountant is of view that it will come under indirect expenses but i knw its wrong, is it drawings, pls let me knw the proper group and heading for ledger

thanks

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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28 December 2011 If the firm wants to claim deduction of this donation under Section 80G, then treat it as an expense and charge to Donation A/c.

This donation will be disallowed while computing business income and 50% of the donation will be allowed as deduction u/s 80G.

If, however, the partner wants to claim the deduction u/s 80G, then charge it to Drawings A/c.

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