CA HAYEDAR SHAIKH (Practice ) (627 Points)
07 March 2015Dear Sir,
A Private Limited Company has paid the service tax after the due date of filing of Income Tax Return.
My question is
Whether the service tax paid after the due date of filing of return is disallowed or not?
If disallowed, whether before DUE DATE OF FILING OF IT RETURN OR BEFORE THE FILING THE RETURN?
Please specify the section also.
Regards
From
Hayedar Shaikh
Swami Ayyappa Nuli
(TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER)
(1372 Points)
Replied 07 March 2015
Actually there are two accounting treatement for Indirect tax adopted by organistaions
1) Service tax collected will be Credited to Profit and Loss account and Service tax paid on Input services and amount paid to CBEC will be Debited to profit and loss account
2) Service tax collected will be treated as Liablility under head "Service tax payable" and service tax paid on Input services debited to "Service tax receivable a/c" and cash or cheque paid to department will be debited to "Service tax payable a/c" after adjusting "Service tax receivable a/c"
In first case, you treat Indirect tax as expense and income as well, in those cases, if you fail paid those Indirect taxes by the Date of Filing of Return, Then they will be disallowed u/s.43B and will be allowed in the year in which you paid such tax to respective department.
In second case, there would be no problem at all as you recognise debit items as Asset and credit item as Liability. since no expense is recognised, Disallowance of expense u/s.43B not at all arise.
No where in sec.43B explained that such expense should be paid before Due date of filing of return. So if you file late return u/s.134(4) and paid such service tax after 139(1) then still it will be allowed provided you followed method 2.
Vishal Goel
(Chartered Accountant)
(1688 Points)
Replied 08 March 2015
Hello,
As per section 43B, Deduction is allowed in the previous year in which sum is actually paid.
Exception
If such sum is actually paid on or before the due date of filling of return under section 139(1) in respect of the previous year in which the liability was incurred and the proof of such payment is furnished along with the ROI, then deduction shall be allowed in the previous year in which liability was incurred (if the assessee is following accrual system of accounting.)
CA HAYEDAR SHAIKH
(Practice )
(627 Points)
Replied 09 March 2015
Thank you very much for the information.
Regards
From
Hayedar Shaikh
Excel Mastery Program
CAclubindia
