Treatment of income tax in partnership

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)
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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.

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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)
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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.

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