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Its urgent pls help

radha (nil) (198 Points)

04 October 2011

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

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14 Replies

Devendra (Chartered Accountant) (4775 Points)
Replied 04 October 2011

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

1 Like

sumit jain (.) (844 Points)
Replied 04 October 2011

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

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 04 October 2011

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

1 Like

Amit Gupta (Loosening Myself) (1508 Points)
Replied 04 October 2011

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

Himani Manchanda (CA Final Student, Bcom) (137 Points)
Replied 04 October 2011

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

1 Like

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 04 October 2011

Interest paid under central excise /vat is allowable expenditure.

1 Like

Rakesh (Executive- Commercial & CMA final student) (179 Points)
Replied 04 October 2011

Agree with Sumit Jain

2 Like

valji (Accounts manager-MBA) (2150 Points)
Replied 04 October 2011

AGREEE WITH DEEBENDRA

CA Prakash Rai (CA) (129 Points)
Replied 04 October 2011

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

Ankur Singhal (Audit Assistant) (97 Points)
Replied 04 October 2011

If it is a penal nature then not allow otherwise allow

1 Like

srinivass (CA Final) (2466 Points)
Replied 04 October 2011

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...

Azim Khan ACA,CS,CMA*,LLB* (Proprietor) (1312 Points)
Replied 04 October 2011

Completely agreed with sumit jain......

1 Like

Pradeep Kumar Banduni (Commercial) (190 Points)
Replied 05 October 2011

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)

1 Like

Hari Wadhwa (CA in Practice) (485 Points)
Replied 03 March 2012

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.