Deduction u/s 43B of the I. T. Act is allowable for payment of VAT payable before due date u/s139

[Kishor Deshpande]

One of my client is shown sales and purchase in the profit & loss account net of the VAT and VAT is shown in the balance sheet as liability. If he will pay the VAT payable as on 31st March 2010 before due date of filing of his income tax return then same shall be disallowed u/s. 43B or not ?

[Surender Gupta]

If you are showing sales and purchase net of VAT in the profit and loss account the same is contrary to provisions of section 145A. On the other side, if you deposit the VAT befor due date of filing of return, it will be allowed as eligible deduction u/s 43B.

AI Summary

Deduction under section 43B allowed when VAT is paid before the return filing due date, with presentation caveats. VAT shown as a balance sheet liability is deductible if the VAT liability is paid before the due date for filing the income tax return; timely payment qualifies as an allowable deduction under the payment tied deduction provision. Separately, presenting sales and purchases net of VAT departs from the required accounting treatment and raises compliance concerns regarding presentation of VAT.