Stamp duty paid on purchase of shop - treatment

Hi, my client, is a works contractor & Has purhcased a shop for business purpose.

Purchase cost - 1,50,000

Stamp Duty - 6,900

Stamp duty should be under which head in tally & Would that be treated as purchase cost?
 

What will be the journal entry??

 

& What if I sell this shop for 2,50,000/- & Registration fees 5000/-
 

What will be the treatment of statutory fees in both the cases??

Thanks in advance,,,,

Replies (2)

At the time of purchase: Yes. Stamp duty can be taken as a purchase cost bcoz as per Para 9.1 of AS 10 if you pay any non-refundable taxes/ duties during purchase of a asset you can cosider the same as the cost.

Thus the entry will be:

Building A/c Dr                  1,56,900

To Vendor A/c Cr               1,56,900

(Since stamp duty is added alongwith the purchase cost there is no need to create a seperate head)

At the time of sale: While selling the property you should treat the registration charges as expenses and the journal entry is as follows.

Customer A/c Dr               2,50,000

To Asset A/c                      2,50,000

 

Registration fees Dr.      5,000

To Cash A/c                     5,000

STAMP DUTY REGISTRATION TALLY UNDER IN GROUP.

CAPITAL A/C THIS RIGHT NA

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