Want to know more
Enter the details and we'll call you soon

Name :

Company Name :

City :

Mobile No. :

Email id :


Thank you for your details

Our Executive will reach you shortly.

Your Session Will Expire in   seconds.
If you do not wish to log-out, choose 'Let me continue'
Reset SessionCancel Session
Skip Navigation Links > Post Query > View All Query > Query Reply
Editorial Board on Accounts and Audit
  • Treatment of Customs Duty

    by Chirag on Saturday, July 27, 2019 at 04:44 PM

    Dear Sir, Customs Duty Paid on Import of Plant & Machinery should be capitalised to Machinery A/c or it should be charged to P&L A/c ?? 2) Customs duty paid on Import of Raw Materials should be shown by way of Separate A/c in P&L A/c named "Customs Duty" or else it should be added to Basic Value of Purchases of Raw Material A/c in P&L A/c ?? 3) Handling charges of CHA paid in relation to import of Machinery should be capitalised to Machinery A/c or else it should be charged to P&L A/c ??

    Replied byEditorial Board Saturday, August 03, 2019 at 05:02 PM

    AS 10 provides that the cost of an item of property, plant and equipment shall include its purchase price, including import duties and non-refundable purchase taxes, and other direct costs incurred to make the item ready to use in the manner as intended by the management. So, it is clearly mentioned that custom duty paid on import of machinery shall be included in its cost. If credit can be taken of such duty then it should be net of refundable amount.

    Further, as handling charges are one of expenditure incurred to make the machinery ready for use, these should be included in the cost of machinery.

    According to AS 2, the cost of inventories comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Here, costs of purchase include any duties and taxes which are subsequently not refundable. Custom duty on import, i.e. import duty is considered as non-refundable duty. So, such duty is added to the cost of inventories.

Best view in 1140 x 768