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Income tax payment

Tax queries 464 views 2 replies

CMA. Rakesh Kataria

Practising Cost Accountant

541 Points Posted on 31 May 2011

KAG ( based in Mumbai ) is the companies doing international business, Buying fabric from China and selling it to buyer from Bangladesh,

Bangladesh buyer open 120 days transferrable LC to KAG Mumbai and KAG transfer LC to China partially by keeping the margin.

Fabric shipped directly from china to Bangladesh directly and shipping documents moved through KAG Bank in Mumbai to Lc issuing bank in Bangladesh.

Bangladesh bank accepted the documents and trade transection completed.

Now payment will come after 120 days as per the LC,

Pl. advise KAG needs to pay advance tax when transection completed or advance tax will be paid after receipt of the payment .

Replies (2)

U S Sharma

glidor@gmail.com

21068 Points Posted on 31 May 2011

Invoice date is to be taken for taxation purpose,

as the difference of buyer and seller is booked on the date of invoice, mere payment is due, which can be reflected in debtors and creditors, but the transaction is completed,

Advance tax should be paid only after receving payment. Boz in some cases transaction does not get complited on due date LC only ensures seller that he will gett payment after delievery of goods but if for any reason goods cant be send by seller within 120 days than this LC will be expired and new LC will be opened so it is my advise to pay advance tax after receiving payment.