Sec. 43b
This query is : Resolved
17 September 2014
please tell me which kind of taxes, duties. cess are covered under sec. 43B and liable to report on 3CD - paid on or before of itr filling date,
tell me following are coverd or not
vat payable ( not P&L route }
TDS PAYABLE
service tax payable ( not P&L route }
tell me following are coverd or not
vat payable ( not P&L route }
TDS PAYABLE
service tax payable ( not P&L route }
17 September 2014
yes,
VAT payable tds payable and service tax payable as on 31.03.2014 has to be reported accordingly as applicable in tax auidit report
please read tax audit guidence note issued by icai for more clarity
VAT payable tds payable and service tax payable as on 31.03.2014 has to be reported accordingly as applicable in tax auidit report
please read tax audit guidence note issued by icai for more clarity
18 September 2014
I WILL READ.
MY DOUBT IS IF ANY TAX, DUTIES ARE PAYABLE AND NOT IN THE NATURE OF EXP. THEN IT IS COVER UNDER SEC. 43B
AND WHAT WE DO IN TAX COMPUTATION IF IT NOT PAID ON OR BEFORE
MY DOUBT IS IF ANY TAX, DUTIES ARE PAYABLE AND NOT IN THE NATURE OF EXP. THEN IT IS COVER UNDER SEC. 43B
AND WHAT WE DO IN TAX COMPUTATION IF IT NOT PAID ON OR BEFORE
18 September 2014
If not paid this amount have to added back
.
.
and company have to pay tax on it
.
.
and it is allowed in the year in which it is paid actually
.
.
and company have to pay tax on it
.
.
and it is allowed in the year in which it is paid actually
22 September 2014
HOW ANY ITEM ARE DISALLOWED IF IT IS NOT DEBITED TO P&L A/C.
23 July 2025
### **Explanation of Section 43B of the Income Tax Act, 1961**
**Section 43B** of the Income Tax Act deals with certain **taxes, duties, and cesses** that are **not deductible in the year in which they are accrued** but are deductible only when **actually paid**. These payments are **allowed** only in the year in which the payment is made, irrespective of the accounting treatment (whether debited to P\&L or not).
Here's a detailed explanation to clear your doubts:
---
### **What is covered under Section 43B?**
The following **taxes, duties, and cesses** are covered under **Section 43B** and will only be allowed as deductions in the year in which they are **paid** (not just accrued or payable):
1. **Excise Duty** (as per Central Excise Act)
2. **Customs Duty** (as per Customs Act)
3. **Sales Tax/VAT** (now including GST in some cases, but in general, for state-specific sales tax, it applies here)
4. **Service Tax** (under Finance Act)
5. **TDS (Tax Deducted at Source)** payable
6. **Employee’s Provident Fund (EPF)** contributions
7. **ESI (Employees' State Insurance)** contributions
8. **Other duties and cesses** as per specific tax laws.
---
### **Your Specific Questions**
#### **1. VAT Payable (Not P\&L Route)**
If you have **VAT payable** (and you're not taking it through the P\&L route), **Section 43B** would still apply **if VAT is not paid before the due date of filing the return**.
* **VAT payable** must be paid to the authorities before the due date of filing the return of income to be allowed as a deduction. If **not paid on or before** the due date of filing the return, the amount will be **added back to the income** in the tax computation.
#### **2. TDS Payable**
Yes, **TDS (Tax Deducted at Source)** is covered under **Section 43B**. If the company has **TDS payable** and it is not paid before the due date of filing the return, it is **disallowed** in the computation of income. You will need to **add back** the unpaid TDS to the income.
* For example, if the company has **TDS payable** of ₹1,00,000 as of March 31 and does not pay it before filing the return of income, the ₹1,00,000 will be **added back** to the income for the year.
#### **3. Service Tax Payable (Not P\&L Route)**
If **service tax payable** is not accounted for through the P\&L route and is instead shown as a liability, **Section 43B** applies here too.
* **Service Tax payable** will also be **disallowed** for tax computation if it is **not paid** before the due date of filing the return. This will be added back and will be allowed as a deduction only in the year when it is actually paid.
#### **4. General Rule for Section 43B:**
For all the taxes and duties under Section 43B, if they are **not paid on or before** the due date of filing the return, they are **disallowed** in the tax computation. These amounts will be **added back to the income** for the year.
* **Example**: If a company has **TDS payable** of ₹10,000 and does not pay it before the due date of filing the return, ₹10,000 will be added back to the income of that year and taxed accordingly. The company will get a deduction for the **TDS paid** in the year when it is actually paid.
---
### **Section 43B and Items Not Debited to P\&L**
You also raised a question about **items not debited to P\&L**.
* **Section 43B applies regardless of whether the tax, duty, or cess is debited to the P\&L account or not**. The key point is the **payment** of such amounts.
* Even if the amounts are shown as liabilities in the balance sheet (not through P\&L), if **they are not paid by the due date for filing the return**, they are **disallowed** under Section 43B and have to be added back to the income.
* For example, if **VAT, TDS, or service tax payable** is shown in the balance sheet and not debited to the P\&L account, it still falls under the purview of Section 43B and must be paid before the filing of the return to be allowed as a deduction.
---
### **Tax Audit Report (3CD)**
The tax audit report (Form 3CD) requires the auditor to **report** details regarding the payment of certain taxes, duties, and cesses as per **Section 43B**.
* **Section 43B** covers taxes like VAT payable, TDS payable, Service Tax payable, and similar items. If any of these are not paid before the due date of filing the return, they need to be **added back** to the income and reported accordingly in the tax audit report (Form 3CD).
* **Guidance Note by ICAI**: The ICAI's **Guidance Note on Tax Audit** provides detailed instructions on how to handle such payments. For instance, **unpaid VAT**, **unpaid TDS**, and **unpaid service tax** should be **added back to the income** if they are not paid before the due date for filing the return.
---
### **Summary of Key Points**:
* **Section 43B** applies to taxes, duties, and cesses that are not deductible in the year of accrual but only in the year of **actual payment**.
* If any of the amounts (like **TDS payable**, **service tax payable**, **VAT payable**) are not paid before the due date of filing the return, they are **disallowed** in the tax computation and must be added back to the income.
* These **disallowed amounts** will be allowed as a deduction in the year in which they are **actually paid**.
* Even if taxes or duties are not **debited to the P\&L**, **Section 43B** applies to such **unpaid liabilities** and they must be reported in the tax audit (Form 3CD).
Let me know if any specific point needs further clarification!
**Section 43B** of the Income Tax Act deals with certain **taxes, duties, and cesses** that are **not deductible in the year in which they are accrued** but are deductible only when **actually paid**. These payments are **allowed** only in the year in which the payment is made, irrespective of the accounting treatment (whether debited to P\&L or not).
Here's a detailed explanation to clear your doubts:
---
### **What is covered under Section 43B?**
The following **taxes, duties, and cesses** are covered under **Section 43B** and will only be allowed as deductions in the year in which they are **paid** (not just accrued or payable):
1. **Excise Duty** (as per Central Excise Act)
2. **Customs Duty** (as per Customs Act)
3. **Sales Tax/VAT** (now including GST in some cases, but in general, for state-specific sales tax, it applies here)
4. **Service Tax** (under Finance Act)
5. **TDS (Tax Deducted at Source)** payable
6. **Employee’s Provident Fund (EPF)** contributions
7. **ESI (Employees' State Insurance)** contributions
8. **Other duties and cesses** as per specific tax laws.
---
### **Your Specific Questions**
#### **1. VAT Payable (Not P\&L Route)**
If you have **VAT payable** (and you're not taking it through the P\&L route), **Section 43B** would still apply **if VAT is not paid before the due date of filing the return**.
* **VAT payable** must be paid to the authorities before the due date of filing the return of income to be allowed as a deduction. If **not paid on or before** the due date of filing the return, the amount will be **added back to the income** in the tax computation.
#### **2. TDS Payable**
Yes, **TDS (Tax Deducted at Source)** is covered under **Section 43B**. If the company has **TDS payable** and it is not paid before the due date of filing the return, it is **disallowed** in the computation of income. You will need to **add back** the unpaid TDS to the income.
* For example, if the company has **TDS payable** of ₹1,00,000 as of March 31 and does not pay it before filing the return of income, the ₹1,00,000 will be **added back** to the income for the year.
#### **3. Service Tax Payable (Not P\&L Route)**
If **service tax payable** is not accounted for through the P\&L route and is instead shown as a liability, **Section 43B** applies here too.
* **Service Tax payable** will also be **disallowed** for tax computation if it is **not paid** before the due date of filing the return. This will be added back and will be allowed as a deduction only in the year when it is actually paid.
#### **4. General Rule for Section 43B:**
For all the taxes and duties under Section 43B, if they are **not paid on or before** the due date of filing the return, they are **disallowed** in the tax computation. These amounts will be **added back to the income** for the year.
* **Example**: If a company has **TDS payable** of ₹10,000 and does not pay it before the due date of filing the return, ₹10,000 will be added back to the income of that year and taxed accordingly. The company will get a deduction for the **TDS paid** in the year when it is actually paid.
---
### **Section 43B and Items Not Debited to P\&L**
You also raised a question about **items not debited to P\&L**.
* **Section 43B applies regardless of whether the tax, duty, or cess is debited to the P\&L account or not**. The key point is the **payment** of such amounts.
* Even if the amounts are shown as liabilities in the balance sheet (not through P\&L), if **they are not paid by the due date for filing the return**, they are **disallowed** under Section 43B and have to be added back to the income.
* For example, if **VAT, TDS, or service tax payable** is shown in the balance sheet and not debited to the P\&L account, it still falls under the purview of Section 43B and must be paid before the filing of the return to be allowed as a deduction.
---
### **Tax Audit Report (3CD)**
The tax audit report (Form 3CD) requires the auditor to **report** details regarding the payment of certain taxes, duties, and cesses as per **Section 43B**.
* **Section 43B** covers taxes like VAT payable, TDS payable, Service Tax payable, and similar items. If any of these are not paid before the due date of filing the return, they need to be **added back** to the income and reported accordingly in the tax audit report (Form 3CD).
* **Guidance Note by ICAI**: The ICAI's **Guidance Note on Tax Audit** provides detailed instructions on how to handle such payments. For instance, **unpaid VAT**, **unpaid TDS**, and **unpaid service tax** should be **added back to the income** if they are not paid before the due date for filing the return.
---
### **Summary of Key Points**:
* **Section 43B** applies to taxes, duties, and cesses that are not deductible in the year of accrual but only in the year of **actual payment**.
* If any of the amounts (like **TDS payable**, **service tax payable**, **VAT payable**) are not paid before the due date of filing the return, they are **disallowed** in the tax computation and must be added back to the income.
* These **disallowed amounts** will be allowed as a deduction in the year in which they are **actually paid**.
* Even if taxes or duties are not **debited to the P\&L**, **Section 43B** applies to such **unpaid liabilities** and they must be reported in the tax audit (Form 3CD).
Let me know if any specific point needs further clarification!
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