Bank guarantee fees
This query is : Resolved
Ramesh Kumar Bhatter
(Querist)
04 June 2012
The assessee is manufaturer and selling goods to govt on allotment of Tenor. As per terms of Tendor allotment they have to provide bank guarantee for 3 years.
please suggest the accounting of Bank Guarantee Fees Paid for 3 years to Bank with respective section or rules under Income Tax.
please suggest the accounting of Bank Guarantee Fees Paid for 3 years to Bank with respective section or rules under Income Tax.
CA CS Amit S. Kedia
(Expert)
04 June 2012
Bank Guarntee fees is sort of bank charges. you can book it under Finance/Bank Charges.
The same is deductible expense.
Bank Guarantee given has to be shown as "Contingent Liability" which is a off balance sheet item and disclosed by way of notes.
The same is deductible expense.
Bank Guarantee given has to be shown as "Contingent Liability" which is a off balance sheet item and disclosed by way of notes.
Ramesh Kumar Bhatter
(Querist)
04 June 2012
Whether Bank Guarantee Fees Paid for 3 years to be allowed in the year of payment wholly or in 3 years under income tax
CA CS Amit S. Kedia
(Expert)
05 June 2012
Under income tax it will be allowed in the year of exenditure itself.
For Accounting purpose, you can show fees for 2 years as prepaid expense and fees for 1 year as current year expense.
For Accounting purpose, you can show fees for 2 years as prepaid expense and fees for 1 year as current year expense.
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