Ihave made a provision for Tax of Rs 15,000 but next year made a payment of Rs 18,000. I was told Rs

[Guest]

Ihave made a provision for Tax of Rs 15,000 but next year made a payment of Rs 18,000. I was told Rs 3,000 is to be disallowed this year. But am unable to know under which section?

[DEV KUMAR KOTHARI]

For better and correct response, give yr. Q. correctly and compeletely. If it is provision for income-tax or wealth-tax, entire amount is to be disallowed. If it is any other allowable tax, duty, fees etc. then full payment may be allowed if actually paid within prescribed time- due date to file return, provided the payment is agaisnt earlier years liabilty, and there is case of short provision. Disallow provision outstandign as on 31st march Rs. 15000 and claim actual payment for the relevant previous year, made before due date Rs.18000/- . Check whether Rs.18000 is relating to earlier year and any part is not for the year in which payment is made. In that case current liability padi will be allowed in computation of current income.

AI Summary

Tax provision disallowance: excess payments may be allowed if paid before the return due date and relate to earlier liabilities. Provisions for income tax or wealth tax recorded as outstanding at the balance sheet date are disallowed; the provision as on 31 March should be disallowed and the actual tax payment may be claimed in the relevant previous year if made before the return filing due date. For other taxes, actual payments discharging earlier year liabilities may be allowable if paid within the prescribed time; payments attributable to the current year are allowed in computing current income.