why is not income tax paid allowed as an deduction in profit and loss account?
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General Query Regarding income tax.
Replies (9)
Quick Summary
It's liability & it will go balance sheet . Corresponding expenses will be there in P & L
When one prepares P&L a/c one has to follow a set format. In this format sales less expenses leads to profit after profit is arrived at one pays income tax on profits! So how can one deduct income tax as an expense?
You may see provision for income tax under current liabilities
Eshwara! Eshwara! he is talking about p&l a/c and you are replying as balance sheet! Aayeyayee yo ayayeyaa! What did you have for dinner Ramah! Po Po!
Samantha ! Actress !!
PBT - Tax = PAT
Sch III has Income tax in the format in P&L but final effect in accounts will be in Balance Sheet ..
Open your eyes and have dinner and come back
Are you trying to teach that in the equation you cited Tax has now qualified as "expense" ???
let me suggest you should read an ILO ready reckoner "How to read a balance sheet ".Your concepts will straighten out in less than an hour!
let me suggest you should read an ILO ready reckoner "How to read a balance sheet ".Your concepts will straighten out in less than an hour!
Income Tax is not an expense for calculating Net Profit for tax purposes..
For cash flow purposes and PAT purposes only it will be disclosed as per Sch III
For cash flow purposes and PAT purposes only it will be disclosed as per Sch III
Only first para relevant! But it has no explanatory note!
Thanks Murugaa!
Thanks Murugaa!
Income Tax is not an expense and that's why it's not allowed as a deduction in profit and loss account..
Hope this works thalaivee !!
Hope this works thalaivee !!
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