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(urgent help needed) Prepaid Business Expenses

pr br (319 Points)

11 March 2021

I run google ads for my business, google generate an invoice at the end of every month (for the payment we made during that month), suppose I add Rs. 10,000 to my google ads account this month ( MARCH 2021 ) , but out of this Rs.10,000 only Rs.2000 deducted from my google ads account during the MARCH month and rest balance(Rs.8,000) is carried over (it is there in google ads account only, not transferred to my bank).

can I show it (10k ) as a business expense in ITR or only 2,000?

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6 Replies

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 11 March 2021

Show only 2000 rupees as business expenses

CMA Poornima Madhava (CMA) (13097 Points)
Replied 11 March 2021

I agree with Sourav. ₹2000/- to be treated as business expenses for March 2021 and the rest can be shown under current assets which can later be debited to P&L as and when the expense is booked.

Kapadia Pravin (17249 Points)
Replied 11 March 2021

For March 2021, expense is only 2000/-. Balance 8000/- is pre-paid for period April to July 2021.

pr br (319 Points)
Replied 11 March 2021

but google gives monthly invoices of Rs.10,000 at the MARCH end not actually spent.

CMA Poornima Madhava (CMA) (13097 Points)
Replied 11 March 2021

All would depend on the period for which the invoice is raised. If the invoice pertains only to March, then you may consider entire 10,000 as expense for the CY.

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