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Custom duty fine and interest

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Rajkumar Gutti

686 Points Joined August 2018

Custom dept. impose fine & interest for late payment of import custom duty.

My queries below

whether fine & interest are allowable as deduction from business taxable income

If yes

Can this expenses merge as custom duty

or accounted separately as fine & interest

Replies (1)

Rama chary Rachakonda

Master in Accounts & high court Advocate

8979 Points Joined December 2011

In India, the Income Tax Act allows deduction of customs duty, fine, and interest paid on late payment of import customs duty, but with certain conditions:

1. _Customs duty_: Allowable as a deduction from business taxable income.

2. _Fine and interest_: Allowable as a deduction, but only if: - Paid during the previous year (relevant to the assessment year). - Relatable to the business or profession. - Not capital in nature.

Accounting treatment: -

_Customs duty_: Part of the cost of goods imported (inventory) or treated as a separate expense (if not inventory-related). -

_Fine and interest_: Treated as separate expenses, not merged with customs duty.

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