IM DOING TAX AUDIT OF PROPRIETORY CONCERN IN WHICH PROP IS PAID 10000/- PROFESSION TAX WHICH IS FOR 5YEARS IN ADVANCE. SO IN CURRENT YEAR ACCOUNTANT DR 2500/- AND 7500/- STANDS IN CURRENT ASSETS AS ADVANCE PT PAID WHICH IS SUBSIQUANTLY WILL WRITEOFF IN FUTURE YEAR BY YEAR. WHETHER ACCOUNTANT IS CORRECT???
OR WHOLE 10000/- WILL COMES IN CURRENT YEARS P&L??
Hi Chirag,
This proprietory concern has paid Prof Tax under 'Composition Scheme' where Rs. 2,500/- is for first year and Rs. 7,500/- is for next 4 years. Treatment given by Accountant is correct.
Only Rs. 2,500/- of CY will be debited to P&L and remaining Rs. 7,500/- shall be written off to P&L in next 4 years in an equitable manner i.e. Rs. 1,875/- every year.
please give notification or reference..
M N Rao & Associates LLP
Vijayawada
CA Inter
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