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Excess provision written back
Excess provision for gst payable created in the books in last year, if it is written back in current year is any income tax liability? this is taxable if the gst is not passed through P&L (exclusive method as per section 145A)
Replies (1)
Writing back an excess provision is generally taxable as business income if that provision was previously claimed as a tax-deductible expense (under Section 41(1) of the Income Tax Act). If the provision was never allowed as a deduction, it may not be taxable upon reversal. Please verify your historical tax filings to see if the original provision was allowed as a deduction.
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