I was charged a penalty on my GST dues in the month of March '20. I paid for this from my bank. How do I record this penalty?
Thanks & Regards,
If you are referring to GST in Australia you should allocate it to an expense account named Fines & Penalties. All government imposed fines and penalties are not tax deductible.
Thanks Tony for your response. I am in India.
The advice is basically the same, no matter where you are. Enter a payment, posting the fine to a suitable expense account. The only difference that might occur is whether the fine is deductible under local law. If it is, it can be posted to an account with other deductible expenses, such as a fees or miscellaneous expenses account. If not deductible, you will want to separate it to make later tax filings simpler. The important thing is to realize the fine is not your tax, so do not post it to your tax liability account, because that will reduce the amount you think you should pay for the next filing period.
I have created an expense account ‘Penalties & Fines’ and posting these payments there. These are not in anyway adjustable according to my local law.