Treatment of income tax in partnership

Save Share

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

16 March 2015 Income Tax Payable by a partnership firm is an expense of the firm or not. Is income tax debited in profit and Loss A/c or Profit and Loss Appropriation A/c.

CA ANILKUMAR B.COM FCA DISA

CA ANILKUMAR B.COM FCA DISA (Querist)

16 March 2015 Provision for income tax should be made in P&L and the balance profit is appropriated among or b/w partners. That is why share if profit is exempted in the hands of partners . Firm pays tax on that.

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

17 March 2015 Thank you sir. Just one more clarification. Provision for tax will be made in P & L A/c or P & L Appropriation A/c. I feel since it is not an expense of the firm, the provision for tax should be made in P & L Appropriation A/c just like in case of companies, Provision for Tax is made below the line.

Rupesh Jain

Rupesh Jain (Expert)

17 March 2015 INCOME TAX IS NOT THE EXP.FOR FIRM.

YOU CAN MAKE PROVISION IN P & l A/C AND PROFIT TFR. TO PARTNER CAPITAL A/C.
OR
TFR THE PROFIT AND TAX BOTH IN CAPITAL A/C
AS YOU WISH. BAL.WILL REMAIN SAME.

Message likes : 2 times

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