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Interest on direct & indirect tax

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Querist : Anonymous

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Querist : Anonymous (Querist)
14 January 2013 Can we Debited the Interest on late payment of Direct Tax & Indirect Tax to Profit & Loss a/c ( like TDS & Service Tax)?

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CA Mehta Ankur N.

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CA Mehta Ankur N. (Expert)
14 January 2013 For direct tax , u can not, for indirect tax u can.

As it will be personal exp. in direct taxes, but u can debit in indirect taxes.
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CA PARAS BAFNA

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CA PARAS BAFNA (Expert)
14 January 2013 I agree with the expert.
.
According to Section 40(a)(ii) Income Tax , Interest Payment in relation to Income Tax etc are not deductible.
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Similarly wealth tax is not deductible vide Section 40a(iia).
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Where as indirect taxes are generally deductible U/s 37(1) and interest on such tax payments , being compensatory in nature
is also allowable as deduction against the profits.
.
So direct expenses are, if debited to P&L A/c, required to be added back in the profit at the time of computation of Income.
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