Its urgent pls help

is interst paid on Excise duty sales tax allowed???

Replies (14)

Interest paid on Sales Tax / VAT / Excise / Service Tax is an allowable expenditure.

Whereas Interest paid on TDS, Income Tax is not an allowable expenditure.


Regards,

Devendra k

It depends on whether it is Compensatory interest or Penal interest.. Penal interest will not be allowed for Income Tax purposes.. However, Compensatory interest on Excise & Sales tax shall be allowed for Income Tax purposes

as such interest is not accounted under separate heads but accounted under "sales tax" or "excise duty" only, so its allowed expenditure.

Originally posted by : Devendra

Interest paid on Sales Tax / VAT / Excise / Service Tax is an allowable expenditure.

Whereas Interest paid on TDS, Income Tax is not an allowable expenditure.




Regards,

Devendra k

Yes..!! Interest paid on Excise Duty ,Sales tax are allowed.

Interest paid under central excise /vat is allowable expenditure.

Agree with Sumit Jain

AGREEE WITH DEEBENDRA

Originally posted by : sumit jain

It depends on whether it is Compensatory interest or Penal interest.. Penal interest will not be allowed for Income Tax purposes.. However, Compensatory interest on Excise & Sales tax shall be allowed for Income Tax purposes
 

AGREE

If it is a penal nature then not allow otherwise allow

agree with sumit but i have one clarification sumit could plz tell me about what is the difference between penal interet and compensatory interest...

 

any plz tell my doubt...

Completely agreed with sumit jain......

Originally posted by : sumit jain

It depends on whether it is Compensatory interest or Penal interest.. Penal interest will not be allowed for Income Tax purposes.. However, Compensatory interest on Excise & Sales tax shall be allowed for Income Tax purposes  (I agree with Sumit Jain)

If any amount is paid (either interest or pnalty or  any compensation called by any other name) which is slapped due to voilation of any of the provisions or commiting any act prohibited by any law (whether taxation law or otherwise), is NOT allowable under the Income atx act.

 

As against this, any interest (but not penalty because it can never be in the nature of compensation) which is compensatory in nature (a payt is called compensatory which never requires slapping any penalty under the law) is allowed under Income tax act.

 

Further, a law requires payment of penalty for committing any serious offence or comiting any act which is prohibitted. While, interest is levied for non compliances of law or rules (not serious in nature) which can be compensated.

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