While preparing a profit and loss account, will sales and purchases include GST or not? Can we claim GST in income tax returns as an expense?

Yes or No ?

Let's see,…

Keep it in mind that GST payable or GST receivable( i.e ITC) are both relating to Balance sheet items.no connection with profit and loss account. while booking purchases or sales , effect of Tax item will comes in Balance sheet ledger,which are Grouped under Current Assets or Current Liabilities as case such.

Hence no more confusion , to be consider in Tax computation or not .!! Absolutely not.

Just set off the Liability and ITC ledger pay the balance payable amount to the government.

Further , in the above case , if your a composition dealer or ITC on items covered under blocked credits under section 17 of the CGST act 2017 or any reason, if you're not eligible for ITC ,or you are the ultimate recipient.

Then we shall pass the entry by booking whole amount under respective expense ledger in profit and loss account.

So in this case the GST booked as expense unlike the first case . It is allowed under section 37 of the Income Tax act . We can avail as deduction for Tax computation.

Happy reading !!!

Happy New Year 2k18.

Adinarayana Murthy Ch