Dear all,
we have a new company incorporated in jan 2012. it has not paid salary to director till date and wants to pay salary for the period of Jan 12 to Dec 13 now onwards.
how can he be paid salary now?. also the tax implications and implication under companies act.
whether we shoul show it as arrears of salary or prior period Expense.
Thanx
provision for the salary relating to Jan12-Mar12 was required to be made in teh books in teh month mar12. However if teh same was not being made then it needs to be shown as an prior period expenditure.
This might get allowed in the asst for F.Y. Apr12-Mar13 provided that satisfactory explanation is being given to teh AO.
Regards the accounting perspective, the provisions laid down in AS4 Net profit or loss for teh period, prior period items shud be followed & the amount shud be shown distinctively in teh P&L if it has an impact on the current year's P&L. necessary disclosures shud be also made in the Notes to Accounts.
KK & Company Chartered Accountant
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Saini Pati Shah & Co LLP, Chartered Accountants
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