Latest Query & Reply

What would be the treatment of GST Tax paid by partnership firm under composition scheme in its books of account? Is it to be debited to P & L Acc or to be adjusted in Partners capital?

Reply

As we know that Composition dealer under GST is not allowed to take input tax credit on purchases made by them and they are also not supposed to collect tax (GST) from their customers at the time of supply of goods.

Thus GST paid under composition scheme is an expense and it should be debited in P&L account. And GST paid under composition scheme is allowed as expense in income tax act.