A/C treatment of ROC fee paid for increase of share capital

Hi,

Please guide on the matter.

How the accounting treatment will be done for ROC fees paid to increase the share capital. Will it be capitalised and amortised over a period like preliminary expenses or will be treated as revenue expenditure in the year in which incurred. If capitalised, in how many years can be amortised ?.

Re...

SKG

Replies (6)

IT SHHOULD BE TREATED AS CAPITAL EXPENDITURE ,HENCE CAPITLISED AND AMORTISED IN THE  PERIOD OF 10 YRS MAX

period of amortisation will be 3 to 5 years

It can be amortised if increase in share capital brings extention of new industrial undertakings, otherwise capitalised

ROC expenses allowed for accounting purpose.however, it would not be allowed for income tax purpose.

For the purpose of Accounting, ROC fee for increase in Share capital is to be expensed in the period of payment. Say, Rates and Taxes a/c--------Dr                 xxx

                                 To Bank a/c                                                 xxx

For the purpose of Income tax, if the increase is for Paid up capital, its a revenue expenditure and allowed as an expenditure. If its for the increase in Authorised capital then its a capital expenditure and allowed in 5yrs U/s35D.

Very informative and clearly described great effort Mr. Krishna

 

 

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