Opinion Of Eminent Legal Luminaries On Controversial Issues

Deductions on actual payment -Whether GST is covered u/s. 43B of the Income tax Act, 1961

QUERY: Deductions on actual payment -Whether GST is covered u/s. 43B of the Income tax Act, 1961?
ANSWER: GST (Goods & Services Tax) is applicable from July 1, 2017. GST has replaced the Excise Duty, Service Tax, Countervailing Duty (CVD), Special Additional Duty of Customs (SAD), Value Added Tax (VAT), Central Sales Tax (CST), Octroi, Entry Tax, Purchase Tax, Luxury Tax, Taxes on Lottery, States cesses and surcharges and Entertainment Tax (other than tax levied by the Local Bodies). Thus GST is one tax which covers all the above taxes and which is destination based tax.
Now Section 43B of the Income-tax Act, 1961 reads as under:
“Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of –
(a) Any sum payable by the assessee by way of tax, duty, cess or fee by whatever name called, under any law for the time being in force, or ………………………….
shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income refer to in section 28 of that previous year in which such sum is actually paid by him, ………… …………………………………………………………”
Thus you will appreciate that GST is tax and if it is paid during the previous year, the same shall be allowed in the year of payment, irrespective of the liability of any year.

Posted in Income-tax
One comment on “Deductions on actual payment -Whether GST is covered u/s. 43B of the Income tax Act, 1961
  1. Adv. Rajendra Lodha Dhule. says:

    Whether above opinion is correct in view of the judgement in ITA No. 2556/AHD/2017 dated 1.10.19 in SDCE Projects [P] Ltd vs. DCIT and one another judgement of Delhi High Court? Because now GST payable is not claimed as Expenditure through Profit & Loss account.

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