jyoti rani (secnderabad) (1852 Points)
30 April 2013Hello freinds sometimes a simple question confuse us........
that question is:-
Why tax is not considered as an expense while showing the financial statement, why it is presented as a below line items , why not in all expenses head?
I am confused whether my answer is right or wrong ..just advise me
CA Mayank Ogrivala
(Chartered Accountant )
(174 Points)
Replied 30 April 2013
As per my understanding:
General definition of " Expenses" is "The economic costs that a business incurs through its operations to earn revenue." Income tax is not an expense that business have incurred to earn its revenue. Income tax is on entity's earning as a whole not on particular business. So income tax paid is not related with business thats why it is sometimes called Personal Income Tax. And therefor it is not treated as expense for business but shown under below the line.
jyoti rani
(secnderabad)
(1852 Points)
Replied 01 May 2013
Thanks for your answer.......................
CAclubindia
