The ITAT has held that unpaid GST cannot be disallowed under Section 43B if the liability is not claimed as an expenditure in the profit and loss account.
ITAT Ruling on Unpaid GST and Tax Deductions
The Income Tax Appellate Tribunal (ITAT) has clarified that unpaid Goods and Services Tax (GST) cannot be disallowed under Section 43B of the Income Tax Act if the GST liability has not been accounted for as an expenditure or routed via the profit and loss statement. This decision aims to protect taxpayers from undue tax liabilities on unclaimed expenditures.
The tribunal asserted that any GST liability that has not been claimed as an expense should not fall under disallowance provisions, thereby providing an increased clarity on how taxpayers should manage GST while adhering to tax laws.
Tax advisors should take note of this critical ruling as it impacts how businesses account for GST in their books and advise clients accordingly on their tax filings and assessments related to GST liabilities.
Citations
- ITAT Order (2026)
