1. Confusion regarding uncertainty about bonus payment schedule
See, there is no hard and fast rule that income tax provision made should be same as computation filed in the course of return filing procedure. Further, there is system cross verification which is generally done at the tme of filing of return:
Sum of "Provision for Income Tax" and " Deferred Tax" always equals to the income tax computed for IT Return filing purpose.
Impact in PL will remain same irrespective of your assumption about the payment date of bonus.
So, even if, at the time of preparing balance sheet u presume that bonus will not be paid before 30th september, and DTA assets (say Rs. 8) is created accordingly and say your,
provision for income tax = 40
deferred tax asset credited = (-)10
Tax Expense = 30 charged to P/L account
Even if company pays the bonus, the status will be as on 30th september
Provision for Income Tax = 32
Deferred Tax Asset - (-)2
Tax Expense = 30
But it does not mean, the amount stated in audited balance sheet is wrong. It is absolutely correct and effect of this payment will be adjusted in the next accounting year.
i.e. Amount of Tax Expense remained same , only the composition is changed.
Generallly, the auditor can asceratin/ predict adter lukin the past trends of the payment, whether it will be paid before the due date of filing the return or not. Similarly, auditor can ask the management also regarding their intention for payment of bonus and in this regard management rpresentation can also be taken.
Total thanks : 1 times