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23 February 2013 Hello sir

my query is

Profit before tax is 398000
Depreciation as per books is 10000
Depreciation as per income tax act is 8000
Tax rate is 30%

what will be the entry for provision for income tax

i passed the below entry is this right one,

Profit/Loss A/c Dr 117000
Provision for income tax Cr 117000
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CA. Sunil Kumar

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CA. Sunil Kumar (Expert)
23 February 2013 Profit before Tax - 398,000/-
Add:-
Depreciation as per Companies Act - 10,000/-
Less:-
Depreciation as per Income Tax Act - 8,000/-

Profit Liable for Tax - 400,000/-

Journal Entry

Current Tax A/c Dr. 120,000/-
To Provision for Tax 120,000/-

Note:- Current Tax is a Indirect Tax Head.

Profit before tax means it is after deducted all expense except tax.

Hence Depreciation as per Companies Act already deducted while calculating PBT. hence for the purpose of taxable profit we have to add it back and depreciation as per income tax should be allow.
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