A pvt ltd is incorporated in F.Y. 2017-18 and commencement of production is in F.Y. 2018-19.
Co. incurred pre incorporation expenses viz consultation fees, printing of MOA, ROC stamp duty etc. and after incorporation but before commencement of production viz audit fees, bank charges, directors interest nd salary.
What will be accounting and tax treatment?
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Preliminary expenses
Replies (7)
It will be capitalize in Current Asset head as "Pre-incorporate" expenses...
Refer section 35D of the income tax act 1961
Accounting Treatement: As per AS-26(Para 56) preliminary expense should be recognised as expense when incurred.
Tax Treatement: It will be written off in 5 years.
Tax Treatement: It will be written off in 5 years.
Before incorporated of business all expenses like consultation fees,printing of MOA, ROC stamp duty etc. under head preliminary exp.and you can utilised in 1/5 th year.
Before commencement of production all expenses goes to indirect exp. in P/L account.
Read more at: https://www.caclubindia.com/forum/preliminary-expenses-476593.asp
It can be written off in 5 acoounting year equally through profit and loss a/c or we can also write off in single accounting year but consider 1/5th amount as according to 35 d income tax act 1961
Hi,
How old can be the preliminary expenses of a newly registered pvt ltd company?
Can expenses incurred 3 yrs before registration of company be amortized?
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