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Provision/Expenses Payable

746 views 8 replies
Hi,

While preparing financial I am confused in presentation of labour cess payable and External development charges payable, both are the estimated liability.

I am confused in presentation above expenses as expenses payable or provision? please let me know the correct treatment and as per income tax act this will be allow or not?
Replies (8)
43B applies to tax duty and cess i.e they are allowed only of actually paid before ITR due date.

labour cess = 43B applies, income tax allows only if u have actually paid irrespective of the fact whether shown as expenses payable or provision.

redev charges = i am unclear as to its exact nature. if they are NOT tax/duty/cess, it can be claimed on accrual basis. may be shown as provison/exp payable
Development charges are not taxes in nature, but if we would show this expense as provision, will it be disallow?
Development charges can be shown as expenses payable and this can be allowed under income tax but labour cess payable can only be allowed under income tax if the same has been paid during the year before return filling date u/s 43 b
Labour Cess payable (it's outstanding expenses) and it's allowable in income tax if is paid off before due date of filing return (under 43B) or in next FY if not paid off. Labour Cess is actual liability and how can it be estimated liability ?

Note that here under 43B due date means 30th Sept and not extended due date 31st Oct 2019

What type of External Development charges ?
Is it revenue expenditure or capital expenditure ?

pl clarify for appropriate reply.
It's revenue expenditures
Then make a provision or to expenses payable for External Development charges.

If such expenses are payable to Govt Bodies then it may not be Allowable under 43B
Yeah it's payable to government body, government body dues covered u/s 43b
Originally posted by : Pankaj Arora
Hi, While preparing financial I am confused in presentation of labour cess payable and External development charges payable, both are the estimated liability. I am confused in presentation above expenses as expenses payable or provision? please let me know the correct treatment and as per income tax act this will be allow or not?

 

Provision and Payable, both are liabilities. Provisions are estimated liabilities whereas Payables are fixed amounts.

 


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