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Financial liability and financial asset.

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(Querist)
04 March 2012 why income tax payable, excise duty payable is financial liability, and CENVAT receivable, income tax refund is a Financial Asset?
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CA Siddhartha Bhardwaj

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CA Siddhartha Bhardwaj (Expert)
05 March 2012 Income tax payable, excise duty payable are liabilities becuase the assessee has to PAY these amounts in the future. These liabilities will result in OUTFLOW of money.

On the other hand, CENVAT receivable & income tax refund are assets becuase they provide a BENEFIT to the assessee.

In the case of CENVAT receivable, it will REDUCE the outflow of money towards excise duty/service tax.

Income tax refund will result in INFLOW of monwy.
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