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Sana Pathan (article assistant)     25 May 2013

Schedule vi

As per new Schedule VI, "trade payables shall be classified as 'trade payable' if it is in respect of amount due on account of goods purchased or services received in the normal course of business".  

Now my question is whether the expenses such as telephone exp, , power consumption which are incurred to sale the product or even auditors fees and expenses should be shown as under the head Trade Payables because as per the client these expenses are part of normal course of business. Whether the fees given to auditor will be shown in Trade payables or Other current liabilities ?

 



 9 Replies

S.Satya

S.Satya (CA-FINAL STUDENT)     25 May 2013

audit fee payable  is shown under other current liabilies

CA.Vinita Gupta

CA.Vinita Gupta (Deputy Manager- Finance)     25 May 2013

It will be shown in Other Current Liabilities

priya jain

priya jain (student)     25 May 2013

Trade payables are only for goods and services related to the main business of assessee not for all the services so these should be classified as current liabilities not as trade payables

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)     25 May 2013

 
 Other Current Liabilities
 

Yuvraj Singh

Yuvraj Singh (CA FINAL )     26 May 2013

trade payables normally relate to the activities directly related to production or trading...for ex power, fuel, labour etc. but auditors fees and other which cannot be directly apportioned to business activity, can be treated as Other Current Liabilities


(Guest)

Hi Sana Pathan,

            Expense such as Auditor Expenses, Telephone expenses are not incurred as part of normal course of business. What expenditure incurred during normal course of business is the expenditure which is necessary to run the business and without which the businees cannot operate. In case the client is engaged in manufacturing- Purchase of raw material, stores etc. which shall be classified under Trade Payables. So Services received such as Auditor's fees, Telephone expenses are not incurred during normal course of business. Hence, these should be classified under Other current liabilites.

Karthik

Karthik (student)     27 May 2013

Im of the view that it can be shown as trade payables. Audit fees is one which incurs in "normal course of business". Here the revised sch VI doesnt say that the payment should relate to the main business or ancilliary business. As per guidance note on Revised Schedule vi Other current liabilites are classified as The amounts shall be classified as: (a) Current maturities of long-term debt; (b) Current maturities of finance lease obligations; (c) Interest accrued but not due on borrowings; (d) Interest accrued and due on borrowings; (e) Income received in advance; (f) Unpaid dividends; (g) Application money received for allotment of securities and due for refund and interest accrued thereon; (h) Unpaid matured deposits and interest accrued thereon; (i) Unpaid matured debentures and interest accrued thereon; (j) Other payables (specify nature). The guidance note also says that "other payables" may be in the nature of statutory dues such as Withholding taxes, Service Tax, VAT, Excise Duty etc. Further the guidance note explains on trade payables as follows: A payable shall be classified as 'trade payable' if it is in respect of amount due on account of goods purchased or services received in the normal course of business. As per the Old Schedule VI, the term 'sundry creditors’ included amounts due in respect of goods purchased or services received or in respect of other contractual obligations as well. Hence, amounts due under contractual obligations can no longer be included within Trade payables. Such items may include dues payables in respect of statutory obligations like contribution to provident fund, purchase of fixed assets, contractually reimbursable expenses, interest accrued on trade payables, etc. Hence it can be seen that as per the institure, Other current liabilities includes only those payments like statutory obligations and other contractual obligations. Payment for any goods or services in the normal course of business can be shown under Trade payables.

(Guest)

Hi karthik,

 

          As per the guidance note on revised schedule VI, A payable shall be classified as 'trade payable' if it is in respect of amount due on account of goods purchased or services received in the normal course of business. Audit fee is not a service received in the normal course of business. Institute is trying to say that, these expenses should be incurred in the day-to-day functioning of the business (normal course of business). Audit fee is an expense which is incurred only once during a financial year. This meaning you can draw from the combined reading of goods purchased or services received in the normal course of business. A Company incurrs expenditure towards purchase of goods in the day to day running of the business. Just like this we have to interpret for the word services received.

Rudarmani

Rudarmani (Article)     28 December 2015

It will come under OTHER CURRENT LIABILITIES heading in the balance sheet.


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