Tax Audit - 1. GST Tax Demand, Penalty & interest paid is allowed as deduction or not ??

Reply—As per section 43B of Income Tax Act, a deduction allowable under this Act in respect of 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 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 referred to in section 28 of that previous year in which such sum is actually paid by him.

Therefore indirect tax and interest on late payment (GST) paid as per demand order is an allowable expense. However assessee cannot claim deduction of penalty paid under any law while computing the taxable income.