Save Rs 499. Go Ad-Free with CAclubindia Pro for 2 Full Years. Subscribe Now!

Are non- tax invoices allowable for income tax ?

Tax queries 565 views 2 replies

Hajarath prasad abburu

Student

30 Points Posted on 21 January 2014

I am conducting Internal Audit . The clients are purchasing goods from both Registered (under VAT or Service Tax ) dealers and non- registered dealers. I have told them to take tax invoices for all their purchases or the expenditure will be disallowed under Income tax Act. They have asked if there was any provision regarding that. Whether the thing I stated was true or incorrect? Are Non - tax Invoices/Quotations Bills/ Estimate Bills Allowable for Income Tax Calculation ? Is there any provision regarding that?

Replies (2)

Rashid EL

Audit Assistant

31 Points Posted on 22 January 2014

No such provision is there in the Income tax act.

How ever you should maintain vouchers (with supporting evidence) for each expenditure in excess of Rs.25/-

So, you cannot restrict them to purchase form registered dealer only.

However, Vat laws of some states like kerala provides for purchase tax for those purchases from unregistered dealers.

SAURABH NENE

Chartered Accountant

226 Points Posted on 22 January 2014

Non-Tax Invoices are acceptable for Income Tax for the purpose for claiming deduction. Only the thing is it should be a fair invoice and not mere a quotation or estimate. Further it should be in the name of the assessee. You should also verify the entries in the register if any maintained for receipt of materials, Purchase Orders, GRN Notes etc. to verify genuinness of Purchase. You may also seek third party confirmations.