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Prior Period expenses : Income tax

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Ashu jain

Practicing

88 Points Posted on 29 July 2020

What is the treatment of prior Period expenses, that were not booked in last year but arr booked this year.

Will the same be disallowed in current year and added to income in income tax ?

Thanks & Regards

Replies (3)

Quick Summary

This discussion explores the tax treatment of prior period expenses that were not recorded in the previous financial year but are booked in the current year. It questions whether these expenses will be disallowed for tax purposes in the current year and added back to taxable income. The advice suggests referring to IND AS 8 and AS 5 for guidance on the treatment of prior period expenses, particularly concerning their 'crystallisation' within the current year.

Sagar Patel

Tax and Business Consultant

5533 Points Posted on 29 July 2020

Prior period expenses are not allowed in current year untill and unless the expenses have crystalised during the year.

The prior period expense partaining to earlier years has been a matter of litigation whether such expense could be allowed as deduction during the current year .