Save Rs 588 on a 2-Year Ad-Free CAclubindia Pro Membership. Subscribe Now!

Accounting

Save Share

Join Us Follow Us Add as Source

This query is : Resolved

Report Follow Query Ask a Query

Guest

Guest (Querist)

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

CA. Sunil Kumar

CA. Sunil Kumar (Expert)
Follow

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.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now