Advt Expenses

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This discussion addresses whether significant advertising expenditure for a new branch opening can be treated as deferred revenue expenditure. While previously companies could spread such costs over several years, current Ind AS rules generally prohibit this unless the expenditure meets asset recognition criteria. Furthermore, the Income Tax Act mandates that advertisement expenses are treated as revenue expenditure, meaning deferral is not permitted and may lead to disallowance during tax assessments.

Gopalakrishnan V

Gopalakrishnan V (Querist)

17 April 2025 Huge expenditure spent on advertisement for opening a new branch, can it be shown as deferred revenue expenditure, as the benefit of spending will be spread over years?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

18 April 2025 Earlier, companies could defer large advertisement expenses over 3-5 years if they provided long-term benefits.
However, post-Ind AS adoption, this practice is no longer permissible unless it meets the asset recognition criteria.

Income Tax Act does not allow deferral of advertisement expenses (Section 37 treats it as revenue expenditure).
Any deferred claim may be disallowed during tax assessments.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

28 September 2025 Good luck.....

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