Dear all;
I want to know In the computation of total income of an assessee is interest paid towards late payment of any tax (direct or indirect) allowable expenditure or not? As far as interest on delay payment of Income tax, TDS or FBT is concern these are not allowable expenditure but I want to know about Indirect taxes (VAT, CST, Service Tax etc)
Thanks...
Swohra ,
Since Service Tax , Sales Tax (Vat ) are deductible expenditures , the interest paid on them is also deductible .
Regarding sales tax, interest on late payment of that tax is allowable since sales or purchase is a deductible item(104 ITR 783, 201 ITR 303) just remember as a thumb rule - If the expense is allowed , how can the interest on that expense be disallowed .
I dont agree with the above comments .
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