Short Provision

3176 views

Save Share

Guest

After finalisation of books we found that the provision for unpaid bills makes short. We had paid more then provision.

What should we do as accounting of that bills in current year is not allowable as per Income Tax derpartment and we can't avoid payment of such bills.

for Example We make provision of Rs. 50000/- against Bills of electricity, telephone, Mobile, Petrol etc. and final the Balance sheet.

After submitting the B/S to Income Tax Dept we found that we paid 60000/- against provision what should we do for balance Rs. 10000/-

Replies (3)

S.Srinivasaraghavan

Chief Financial Officer and Co

10628 Points Posted on 13 August 2008

If the short provision is known to you before the accounts are finalised, make that extra provision in the year concerned itself. Otherwise nothing wrong in claiming the short provision in the following year.

CA RAMESH KUMAR AHUJA

CA DISA LLB

4602 Points Posted on 14 August 2008

The difference in the estimates for provisions may be claimed in the current year. The liabilities which have not crystalised but accrued and are booked in the accounts on the basis of estimates. Any difference in such estimates may be adjusted and claimed in the next year.

Guest

Posted on 14 August 2008

We can take care of these expenses in current year but Income Tax Dept will disallowed such type of expenditure.

and also please let me know to what should we do regarding any penalty impose by any govt dept. How should I accounted such penalty (this will also not allowable expenses)