General Query Regarding income tax.

336 views
User Avatar

6 Points Posted on 12 March 2022

why is not income tax paid allowed as an deduction in profit and loss account?

0 Reply Share Follow
On 12 March 2022 at 15:15 Report
Replies (9)
Quick Summary
This discussion clarifies why income tax is not permitted as a deduction within the Profit and Loss (P&L) account. Income tax is calculated on the profit already determined after deducting business expenses. While it represents a liability and appears on the balance sheet, it's not treated as an operational expense for P&L purposes. The standard accounting format dictates that profit is calculated first, and then tax is applied to that profit.

User Avatar

CFO- at NHTF
58280 Points Posted on 12 March 2022
It's liability & it will go balance sheet . Corresponding expenses will be there in P & L
1 Reply
On 12 March 2022 at 20:04
User Avatar

1236 Points Posted on 20 March 2022
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?
Reply
On 20 March 2022 at 21:55
User Avatar

CFO- at NHTF
58280 Points Posted on 20 March 2022

You may see provision for income tax under current liabilities

Reply
On 20 March 2022 at 21:58
User Avatar

1236 Points Posted on 20 March 2022
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!
Reply
On 20 March 2022 at 22:07
User Avatar

CFO- at NHTF
58280 Points Posted on 20 March 2022

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 

 

 

 

Reply
On 20 March 2022 at 22:12
User Avatar

1236 Points Posted on 20 March 2022
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!
Reply
On 20 March 2022 at 22:22
User Avatar

CFO- at NHTF
58280 Points Posted on 20 March 2022
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
Reply
On 20 March 2022 at 22:53
User Avatar

1236 Points Posted on 20 March 2022
Only first para relevant! But it has no explanatory note!
Thanks Murugaa!
Reply
On 20 March 2022 at 22:58
User Avatar

CFO- at NHTF
58280 Points Posted on 21 March 2022
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 !!
Reply
On 21 March 2022 at 00:33

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Recent Topics :

  1. 5th Letter PAN Mismatch with Surname issues still
  2. Criteria to hire an article
  3. Guidence requested for a Finance Professional with
  4. Expert Opinion Required – Form 140 Gross Amo
  5. WRONG TAX DEMAND - formal responses , rectificatio
  6. Foreign remittance
  7. Affordable Residential Flats in Gurgaon
  8. Manufacturing
  9. TAN REGISTRATION ON E-FILLING SITE
  10. Form 10-IEA – Continuing Old Regime

More recent discussions | Post

Related Topics :

Loading