Prepaid exp.

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This query is : Resolved

Quick Summary

When paying for motor car insurance that spans across two financial years, the total expense, including GST, needs to be apportioned. Since GST input tax credit is not claimed on insurance, the entire premium plus GST becomes your cost. This gross amount should be split proportionally between the current financial year's expense and the prepaid expense for the next year.

Rajkumar Gutti

Rajkumar Gutti (Querist)
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20 January 2020 Every year we are paying motor car insurance . The Gst component on insurance value we are not taking gst input credit . Bcoz ineligible. Indurance period spread some current year & some next year .Insurance exp. We devided in two partd current year exp. & Next year prepaid exp. My question is that can gst component is required to split current year exp. & Prepaid exp. Or full gst to current year exp (we are not taking gst input credit. Pl guide.

Gokul Sharma

Gokul Sharma (Expert)
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21 January 2020 all expense including gst became your cost.......and cost should be spited into 2 f.y proportionately.

Amol S Joglekar

Amol S Joglekar (Expert)
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21 January 2020 since you are not availing ITC, gross amount is your insurance expenses (i.e. insurance + GST) So you need to pro rata the gross amount

Spurto Consultancy Services

Spurto Consultancy Services (Expert)
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23 January 2020 Since the ITC is ineligible then the Insurance premium paid including GST will be your total expenditure. The said exp. is to be divided into prepaid and current year exp.

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