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(urgent help needed) Prepaid Business Expenses

Tax queries 222 views 6 replies

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?

Replies (6)
Show only 2000 rupees as business expenses
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.
For March 2021, expense is only 2000/-. Balance 8000/- is pre-paid for period April to July 2021.

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

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.
If invoice is given for full amount of 10k, book it as expense in full.


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