Business guest expenses

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We have frequent business guest visits at our company.

We usually pay their Hotel Bills, Food Bills and Liquor Bills and obtain all bills with or without our comapny name. Many Restaurants/Bars does not provide bills with our Company name.

In this case, how to Account this expenses in our Tally ERP 9. Also whether is this allowable expenses in Income Tax?

eg. Rs.1200 paid to Crimsson Bar

Rs.1200 Paid by Cash or Directly from Company Debit Card to Crimsson Bar.

Under which head we should enter this expenses.

Right now we are using as Guest Conveyance Expenses. Is it right or not?

Replies (11)
Quick Summary
Business guest expenses like hotel, food and liquor can be booked under entertainment or business promotion expenses. Proper narration is important. Such expenses can be justified as business related if incurred for client service and goodwill.

You can Debit such Expenses to Entertainment Account. Also write proper narrations which can help you in future.

 

Regards,

Devendra Kulkarni

Mr.Kulkarni,

Appreciate your reply. However we have come across a new head of expense which you have introduced as "Entertainment Expenses". 

Is it allowable by Income Tax Dept?

If we are paying for our business guests, how does it considered as Entertainment Expenses??

Kindly explain thoroughly.

Thank you.

Expenses are incurred towards the customer's Lunch, Dinner and stay when the customer comes from outside. You can justify the AO by telling him that to give better service to the customers we (ie. the company provides such services to the customer). Thus it helps in increasing the Overall sales of the company and also tries to increase the Goodwill of the Company.

and we get any tax credit on guest / entertainment expenses ?

What will be the Narration for Guest entertainmnet expenses for expenses made by company.

As per my opinion U can debit to Business Promotion expenses instead of creating new head " Entertainment Exps." 

Entertainment expenses has the highest expenses. Besides why are you paying for your clients? You can pay it to some guy who has low wages in your staff. Oh they are value added to your profits? They are spies in India. 😂 

I meant highest slab rate. 

Sir, As I feel entertainment exps. may be treated  recreation, hence no. of quarries may raise , to avoid all problem, we should go with business promotion and it can be narrated as exps. incurred on meeting held with customers on so and so place etc.

Hello everyone 

i want to ask if our office gift our client  bouquets, bags under which expenses it will go ? 
 

best regard

sabnam baniya

Gift/promotion expenses- bags if it has a company logo

Gift expense- boquet

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