Accounting of prior year expenses

Quick Summary
The discussion covered accounting and tax treatment of prior period expenses. Short provisions identified later may be booked in the current year with separate disclosure as prior period items under AS 5. Views differed on income tax allowability, with some suggesting possible disallowance and others noting genuine omissions, crystallized liabilities, and short provisions may be deductible in the year recognized. TDS implications depend on when liability is created and invoices are received.

One More question sir ... The same rent expenses as per agreement start from Jan to dec 17 we received invoice on April 15/04/2017 for Jan to March 2017 period mantion on invoice and agreement can still we book the same in current year and deduct tds for the same month only. OR cause of agreement and period mention it create problem ..... Please advice can we book accrued expenses first and then pay tds from interest from Jan to till now as well penalty.... 

Book accrued expenses first and then pay tds from interest from Jan to till now. No penalty applicable.

 

Penalty for late filing return Jan - March since these entry belong last period not applicable for the same ? 

OK.........................................................

Expenses realted to Last Year ( 2016-17  paid by cash) can Account can i account for the FY 2017-18.

Cash payment means less than 10,000, being the amount not material can be booked in the year of payment

Prior Period Expenses allowed if Recognised/Materialised in current year. 

Eg. Staff Salary Increased in Fy 2018-19 retrospectively from 01/04/2017 

Yes allowed. In our company pay revision settlement happen after one or two years. We make provision on estimated basis. Any difference in settlement booked and allowed in the year of settlement.

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