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Income Tax Paid is Drawings?
income tax is an expense as per AS 22 and income tax paid by private limited company is considered as expense in its Books of accounts but income tax paid by the sole proprietor is considered as his drawings. is the treatment of income tax paid by proprietor as drawings is as per AS - 22 ??
Replies (4)
Quick Summary
Sole proprietor may consider it as drawings
That income tax is your liability as individual and not of your business, thus when you pay income tax from your business it is treated as drawings from your capital as you are paying off your liability with the money of business
Drawings A/c Dr
To Bank A/c Cr
( personal income tax paid from business Bank account)
Capital A/c Dr
To Drawings A/c Cr
( Drawings transferred to Capital account)
To Bank A/c Cr
( personal income tax paid from business Bank account)
Capital A/c Dr
To Drawings A/c Cr
( Drawings transferred to Capital account)
@ Mr Abhishek Kumar Gupta...
Yes, Individual's income tax liability is drawings of the individual. It's not an expenses...
Yes, Individual's income tax liability is drawings of the individual. It's not an expenses...
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