AS 21 : Consolidation : Previous year Tax expenses Treatment

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This discussion clarifies the treatment of previous year income tax expenses when preparing consolidated financial statements. Prior year tax expenses should be deducted from consolidated profit to arrive at Earnings Per Share (EPS) and reported as a prior period item through the Profit & Loss statement, not adjusted directly from reserves. Additionally, 'Tax Expenses' in consolidated statements should exclude previous year tax expenses, which must be presented separately.

NISHANT SIPANI

NISHANT SIPANI (Querist)

07 December 2025 Hello Sir While preparing consolidated financial statement, there is previous financial year income tax expenses.

Now my Query is
1. should I deduct previous year tax expenses from consolidated profit to arrive at EPS. or should I adjust directly from reserve and surplus
2. Is Tax expenses do not comprises previous year tax expenses same as stand alone financial statement Schedule 3 Division 1?

Please share your view

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

08 December 2025 1. Should you deduct previous year tax expenses from consolidated profit for EPS?

✔ YES.
Report it as a prior period item through P&L — never adjust directly from reserves.

2. Does ‘Tax Expenses’ exclude previous year tax expenses like in standalone accounts?

✔ YES.
Prior period tax must be presented separately, not under current year tax.

NISHANT SIPANI

NISHANT SIPANI (Querist)

08 December 2025 Thank You Sir.. Now got clarity

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