Liability on Liability
This query is : Resolved
02 April 2008
Profit is shown as a Liability in the Balance Sheet which is added to Properitor's Capital but we have to pay incometax on profit which is another liability. Dont u think, we are generating one liability through another?
02 April 2008
As far liability of tax on profit is concerned,it is purely a liability and as far as capital is concerned it is a liability towards proprietor.
i just explain u th.an example. Suppose u don`t have any money and starts business by taking loan.so this loan is a liability.With this loan u earn profit in the business and pay tax on profit.This tax is again a liability.So first liability is of principal amount i.e.loan and second liability generates from surplus i.e.profit.So we are not creating liability of tax from loan but from profit.
i just explain u th.an example. Suppose u don`t have any money and starts business by taking loan.so this loan is a liability.With this loan u earn profit in the business and pay tax on profit.This tax is again a liability.So first liability is of principal amount i.e.loan and second liability generates from surplus i.e.profit.So we are not creating liability of tax from loan but from profit.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- GSTR-1A How to update Invoice
- Excess salary payment.
- Stamp Paper for partnership firm change new income tax 2025
- INTEREST APPLICABLE ON ITC REVERSAL PORTION
- Capital gain from sale of house property
- Current Account Opening for Sole Proprietorship with Udyam Certificate - Zero Turnover
- TDS on Purchase of Immovable Property by NRI from NRI
- Regarding TDS Applicability For Director Remuneration
- FORM 26A APPLICABILITY
- SFT Cash Deposit in Current Account
- TDS APPLICABILITY......
- Copyright software
- Cash gift by grand mother to her grand daughter
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
- No Compliences after incorporation
- USEFUL LIFE OF USED/SECOND HAND COMMERCIAL VEHICLES
- Claiming TDS deducted by builder on Hardship compensation and Corpus
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
