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Subsidy received form goverment

TRINATH (Accounts) (919 Points)

03 January 2014

Subsidy received by the government to direct into bank account how we can treat this Transaction

Ex: gas subsidy credited to my account which are linked with adhar Rs.510 /- in my account

What is your opinion on this.

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10 Replies

Amrin (Chartered Accountant) (215 Points)
Replied 03 January 2014

You mean to ask if it is taken as income or not right?

So in case of "GAS" subsidy then the same should be taken as income if u claiming Gas expenses.

Thats my view to it..

CS,CA F,Numrologi TusharSampat (CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert) (85930 Points)
Replied 03 January 2014

Income from other source will be taxed.

Nikhil Kaushik (Fellow CA) (85311 Points)
Replied 09 January 2014

agreed with Tushar...even if you are not claiming any expense on gas, still subsidy received would normally be taxable as is the case with other revenue subsidies. As on today there is no clarity with regards to any attempt from government or income tax department to exclude the same from taxation (as such even if they dont want to tax it, they would require an amendment in the act or a specific CBDT circular to back it up).

refer this article posing possibilities regarding taxation of such subsidies..

https://www.business-standard.com/article/economy-policy/another-reason-to-pay-tax-lpg-subsidy-113121200359_1.html

Sailloja (-) (22 Points)
Replied 16 February 2015

I came to know that tax subsidy received through bank accounts during the financial year 2013-2014 would tantamount to penalising those who faithfully complied with the government instructions, leaving all those who have abstained from doing so unaffected by this decision.

CBDT has to clarify this matter well in advance of the date of filing the tax returns for the current financial year, to enable tax payers to file their returns correctly. This, however, does not apply to those not coming under the tax bracket, and who are not required to file return.

I want to know why it shall be later considered by many(having taxable income ) as income from other sources when we are receiving the amount paid excess as subsidy (bank credit)..

Nikhil Kaushik (Fellow CA) (85311 Points)
Replied 16 February 2015

because it becomes are revenue subsidy once it comes in cash form and thus become tangible income instead of notional income

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 17 February 2015

Hello,

We don’t claim gas cylinder bill as business expenses. So subsidy received for that is not taxable. It is personal expenses.

For business activity commercial gas cylinder is available on which subsidy is not available. Question of taxation doesn't arise.

Nikhil Kaushik (Fellow CA) (85311 Points)
Replied 17 February 2015

since when Income is linked with expense for the purpose of taxation? if you get a direct transfer to your bank account which is not in nature of capital subsidy, it automatically will become your income unless the govt brings in an amendment to specifically exclude such transfers from the ambit of section 56.

Narendra Kumar Tripathi (partner) (23 Points)
Replied 02 July 2015

LPG Gas subsidy is a reimbursement of personal expenditure just to meet out your personal expenditures and Income Tax Act does not give any deduction for expenditure of personal nature (excluding business expenditures); So as per My personal opinion, such LPG Gas subsidy could not form part of income in case of Individual Tax Payers.

Amar (selfemployed) (106 Points)
Replied 10 July 2015

Prior to credit of subsidy amount in our Bank Accounts, we used to get Gas Cylinders at lower rates. Now, we are getting the excess amount paid by us reimbursed by the Govt.through Gas Companies. It is in the nature of Refund of Extra cost recovered from us. The whole arrangement has been done to ensure that the prescribed number of Subsidized Gas cylinders are received only by genuine recepients. Thus in my opinion it does not form part of "Taxable Income"