Interest and Penalty on Statutory Liabilities

Should we make provisions for interest and penalty payable on TDS, GST, Income Tax etc or should we make the entry on actual payment date.

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Quick Summary
This discussion explores the accounting treatment for interest and penalties on statutory liabilities like TDS, GST, and Income Tax. It considers whether to provision for these costs or record them upon actual payment. The consensus leans towards making provisions at year-end if the liability is determinable, especially if payment falls into the next financial year. If liabilities are settled within the same financial year, adjustments can often be made directly within the payment entry.

If it is within the financial year then provision is not required.You may adjust the in payment entry .

If payment falls in subsequent FY & if it is determinable then you may create the provision through journal entry
If it is determinable as on year end then you can create the provision as on 31st March.
Let us know in which month you want to make provision & when was the penalty paid and how much ?
At the year end always the provisions are advisable .But generally all companies tries to pay statutory liabilities at the year end within the end of that month.
You may book in the payment entry .. Payment beyond liability can be adjusted in late fee , interest or penalty

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