372 October 20 To October 26, 2018 u Taxmann’s Corporate Professionals Today u Vol. 43 u^14
Introduction
- One of the useful features of the GST is that it matches
all the purchases and expenses with the supplies made by
the counter-party supplier of the business entity. In this way
the Balance Sheet and Profit & Loss Account provide a true
and fair view of the affairs of the entity. This matching has
become possible due to automatic generation of Form GSTR-2A.
With the matching of GSTR-3B/Purchases/Expenses Ledger
with Form GSTR-2A, the entity may ascertain whether it’s
all expenses have been correctly accounted for. This article
discusses on certain situations and its impact in audit, income-
tax and GST in respect of prior period expenses and incomes.
Prior period items mean those cases where either income or
expenditure pertaining to earlier accounting years has been
accounted for in the current accounting year.
Section 35 of the Central Goods and Services Tax Act, 2017
(CGST Act), read with Rule 56 of the CGST Rules requires
various accounts and records to be maintained by the supplier.
These accounts have a direct connection with the financial
statements and income-tax records of a business entity. Any
mistake, would have an adverse financial impact on the
business entity. - Meaning of the term Prior Period items
2.1 As per Accounting Standard-5 - Prior period items are
income or expenses, which arise in the current period as a
result of errors or omissions in the preparation of the financial
statements of one or more prior periods.
2.2 As per Indian Accounting Standard-8 - Prior period errors
are omissions from, and misstatements in, the entity’s financial
statements for one or more prior periods arising from a failure
to use or misuse of, reliable information that:
Prior Period Expenses -
GST Perspective
anku Gaba
Can.k. Gupta
Executive Director,
s.s. kothari mehta & Co.