Treatment of income tax and interest demand
This query is : Resolved
21 September 2013
A private limited Company was Assessed in Financial Year 2012-13 for the financial year 2010-11 against a certain amount of Profit. After assessment, the company received a demand letter from the authorities with Rs. 1900 Interest Demand and Rs. 300 as Income Tax demand. Now, this payment was made in the year 2012-13. The Entry passed at the time of payment was: Income Tax Demand (FY 2010-11) A/c Dr. 300.00 Interest Account (Exception Item) A/c Dr. 1900 To Bank Account Rs. 2200.00 The related queries are: 1. What is the treatment of Income Tax Demand (FY 2010-11) A/c in the Financial Statements of the Current Year i.e. under which head of Profit and Loss account. 2. For computing the current tax of the company, is the interest paid, an allowable expense? 3. If not, where and how to reflect the entry of interest paid? 4. Is the same to be taken as a prior period item? Please help.
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Read more at: https://www.caclubindia.com/forum/treatment-of-income-tax-and-interest-demand-of-previous-year-265670.asp#.Uj4HNtKkr8o
21 September 2013
Vicky,
1) Last year Income Tax can be shown under current tax.
2) Interest on Income tax is not an allowable expnse
1) Last year Income Tax can be shown under current tax.
2) Interest on Income tax is not an allowable expnse
21 September 2013
Please suggest the answer in reference to point no 3 also.
21 September 2013
it would get debited in P n L A/c only but while calculating the taxable income it would be added to the taxable profits
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