Q. Impact of 43B (h) on GST payments as ICDS 2 requires us to do accounting inclusive of taxes.

Question

If we do accounting inclusive of taxes then we have to record opening stock, purchase, sales and closing stock inclusive of taxes. Till now inclusive of taxes or exclusive of taxes had no impact on profits so nothing was reported in ICDS adjustments. However now on the applicability of 43B (h) if I have not made payment of GST will  I have to add the GST amount back for 43B(h) and will be allowed when actual payment is done?

Answer 1

At the outset, accounting on inclusive basis would be contravening accounting standards and the auditor will have to qualify his report accordingly.

As accounting has to be done on exclusive method only, and ITC is taken of GST, only basic amount is charged to revenue hence only basic amount would be disallowed u/s 43B(h).