Government Grants
This query is : Resolved
CA skmnair
(Querist)
17 July 2007
Interest subsidy received for a project, subsidy given for a term loan as if reducing interest by 2%, loan period next 7 years, Now ineterst subsidy showing in balance sheet liability side, if iam taking this subsidy as defferred income what is base? whether have to adjust on NPV basis, if using NPV whether balance amount will come in subsidy(un adjusted)?
Please send your suggestion fast.
Please send your suggestion fast.
Ravikumar.G
(Expert)
10 October 2007
The income tax department will not allow any deferrment of Income and Expenses. Because there are treated it is postponement of Incometax. Usaually if there is any capital subsidy is adjusted against fixed assets and the revenue subsidy is adjusted against revenue.
08 November 2007
AS -12 is of Government Grants. That allows deferrment of income or adjustment in the value of fixed assets. Income Tax Act does not approve of that.
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