Go AD-FREE with CAclubindia Pro and Daily WhatsApp Updates. Subscribe Now!

General Query Regarding income tax.

Tax queries 171 views 9 replies

Nitish Vats

6 Points Joined January 2017

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

Replies (9)

Eswar Reddy S

CFO- at NHTF

58280 Points Joined August 2012

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?

Eswar Reddy S

CFO- at NHTF

58280 Points Joined August 2012

You may see provision for income tax under current liabilities

Samantha J

1236 Points Joined March 2019

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!

Eswar Reddy S

CFO- at NHTF

58280 Points Joined August 2012

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

Samantha J

1236 Points Joined March 2019

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!

Eswar Reddy S

CFO- at NHTF

58280 Points Joined August 2012

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