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subsidy received for machinery

15 March 2019

assessee purchase machinery of 10000000 on jan and on the april he received govt subsidy of 3000000 how will he treat subsidy as in closing book of march he claim dep on 10000000.

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4 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 15 March 2019

The subsidy is credited to P&L account and is taxable.

Rekha Bisht (64 Points)
Replied 15 March 2019

as par As12 subsidy received for plant and machinery is reduced from value of actual cost of machine

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 15 March 2019

Yes you are correct, but also refer the following...

taxability-of-government-grants-an-analysis

icds-vii-government-grants

sutra.com/experts/column

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 15 March 2019

deduct the subsidy received in the year from the sale of wdv of the asset and compute depreciation accordingly.the grant will be recognized as income in the form of reduced depreciation charge.