Tax on Audit fees

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This discussion addresses whether a Rs. 2,00,000 audit fee for a government-owned company is inclusive or exclusive of Income Tax/GST. The consensus is that the appointment letter or agreement will determine this. Additionally, out-of-pocket expenses paid to auditors are generally not considered part of the audit fee for tax deduction purposes.

abhijit majumder

abhijit majumder (Querist)
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24 March 2022 To
The senior experts

Concerned Company is a Govt owned Company whose auditors are appointed by AG. The Board of Directors fix the remuneration of Auditors Rs.2,00,000/- for Statutory Audit including Tax Audit. This amount agreed by AG and communicated the Company via letter.
However Auditor states that the amount exclude I Tax/GST.(but nowhere it was mentioned whether the amount(Rs.2,00,000/-) was include/exclude I Tax/GST).
Now my query is:
1. How we treat Rs.2,00,000/- (audit fee) inclusive or exclusive of I Tax/GST?
2. If we pay auditors some extra amount by way of Out of pocket expenses will it be included in auditors fee and tax will be deducted?
Thanks
Abhijit

CA Puja Sharma

CA Puja Sharma (Expert)
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24 March 2022 Whether to treat as inclusive or exclusive will depend upon the words mentioned in the appointment letter or appointment agreement.

Out of pocket expenses paid to auditor will not form part of audit fees.

abhijit majumder

abhijit majumder (Querist)
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25 March 2022 Thanks
To CA Puja Sharma for reply
Regards
Abhijit

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