Treatment for Infrastructure and amenities charges

[Velayutham Panchatcharam]

We are a developer in SEZ. We have paid infrastructure and amenities charges to Directorate Town and Country Planning which is statutory body in Tamil Nadu. We just want to know how to treat the these charges in the books of accounts, whether we have to add back to the building cost or consider as expenses.

[Ganeshan Kalyani]

Sir, whether the charges is paid during construction of building. If yes, it would form part of cost of construction. otherwise it will go into current liability account. This is my view. Thanks.

AI Summary

Treatment of infrastructure charges: classify as construction cost if paid during building works, otherwise liability. Where infrastructure and amenities charges paid to a statutory planning authority are incurred during construction of a building, they form part of the cost of construction and should be capitalised; if not incurred during construction, they should be recorded as a current liability (or treated as an expense when settled).