GST paid for past year

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534 Points Joined April 2018

There was a delayed registration under GST and this year we have paid GST for earlier years. a) Can it be shown as an expense in Profit and Loss A/c for a Private Limited Company and b) Will it be allowed as a deduction from Income Tax? 

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On 12 September 2024 at 13:34 Report
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Master in Accounts & high court Advocate
9123 Points Joined December 2011

Great question! a) Yes, the GST paid for earlier years can be shown as an expense in the Profit and Loss Account (P&L) of a Private Limited Company. You can claim the GST paid as an expense in the year of payment, not in the year it was originally due. This is because the GST payment is a business expense, and accounting standards allow for the matching principle, which matches expenses with revenues in the same period. b) For Income Tax purposes, the GST paid can be claimed as a deduction under Section 43B of the Income Tax Act, 1961. This section allows for the deduction of taxes paid during the year, including GST. However, the GST paid should be claimed as a deduction in the year of payment, not in the year it was originally due. Additionally, you may also be eligible to claim interest on the delayed payment of GST under Section 50 of the CGST/SGST Act. This interest can also be claimed as an expense in the P&L Account.

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On 12 September 2024 at 13:39


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