We are MSME and have recvd a subsidy on interest on term loan recently from our state govt. However the payment recvd can only be recognized if we complete 5 years under MSME category which will end in 2014-2019. If we are out of MSME catergory by virtue of any future investments upto 2019 we should pay back the subsidy recvd.
How should we consider the payment recvd from govt...as income(income tax) or deffered income(mat)...?
MSME Faces Tax Dilemma: Classify State Subsidy as Income or Deferred Income? Section 2019 Compliance Key. An MSME received a state government subsidy on interest for a term loan, contingent on maintaining MSME status until 2019. If the company loses this status due to future investments, the subsidy must be repaid. The question posed was whether to classify the subsidy as income for tax purposes or as deferred income. One respondent advised adhering to the subsidy terms, while another suggested treating it as deferred income since it is accrued but not realized. (AI Summary)
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