Sales tax arrears
This query is : Resolved
kantharaja sk
(Querist)
02 October 2014
Dear experts
Actually one of my client he is manufacturing nature and this year he has paid sales tax arrears for last 3 years it costing Rs 8.5 lac due to this I am getting loss in my pl account how can treat said amt and increase my NP
Actually one of my client he is manufacturing nature and this year he has paid sales tax arrears for last 3 years it costing Rs 8.5 lac due to this I am getting loss in my pl account how can treat said amt and increase my NP
CA Ashish Lodha
(Expert)
02 October 2014
Well there are two ways actually,
if you want to claim it as a expense(which is i dont thing if scrutiny comes will be allowable, as sales tax is something which you collect & pay so cant be claimed as an expense) then pass a entry Assets dr to liability cr with the amount.
When paying the same reduce the liability.
& Debit the expense & credit the asset created in one instance or over equal installments as per your convenience.
Or
The right treatment would be as is it an arrears, income in the previous years would have been increased, so just pass entry debiting the "Reserves" & crediting the liability account, which will solve your problem of not reducing the Net profit & also giving the correct effect.
if you want to claim it as a expense(which is i dont thing if scrutiny comes will be allowable, as sales tax is something which you collect & pay so cant be claimed as an expense) then pass a entry Assets dr to liability cr with the amount.
When paying the same reduce the liability.
& Debit the expense & credit the asset created in one instance or over equal installments as per your convenience.
Or
The right treatment would be as is it an arrears, income in the previous years would have been increased, so just pass entry debiting the "Reserves" & crediting the liability account, which will solve your problem of not reducing the Net profit & also giving the correct effect.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Depreciation Chart Companies Act
- GST Audit whether Govt Companies are exempt?
- PTRC Show Cause Notice on Email
- Accounting treatment of AMC alongwith the purchase of Laptop
- Unable to File TDS Q2 Return – New TRACES Portal Error
- EPF ECR NEW RULES Sep 17th 2026
- MSME disclosure and disallowance
- GST Treatment of Purchases with GST Paid where Outward Supplies of Manufactured CattleFeed Exempt
- Issuing of delivery challan by seller of goods
- Taxation of crypto futures in India Fy 2026- 2027
- Expert Help Required for TDS Refund 100000 Through TRACES – AY 2022–23
- IMPORT PURCHASE ENTRY PASSED IN BOOKS OF ACCOUNT
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
