Provision for income tax

no its not necessary to provide for taxation in case of partnership firms

Originally posted by : Arundhati Raychaudhuri
	Is it compulsory to create provision for income tax for a partnership firm?

 If u wont, how will be discharge the liability in the name of firm without charging Income tax expenses to P & L

@ ca vibhash- since provision for tax is not neccesary and also since it is not an expense,u can discharge it through p/L aporopriation A/c in a partner profit sharing ratio.same treatment should also be followed when after assessment any additional tax liability is paid.on the other hand,if at all u provide for taxation in p/l A/c,u hav to carry frward each year the amount till final liability is assessed by AO.

If u dont want to make provision, entry would be...partners a/c...dr.......to bank a/c or debit income tax expense in p/l and credit bank , effect in both d cases would b same.(i.e. no need to show tax paid under current asset).Also debiting income tax in p/l does not mean u r making provision. When u debit advance tax(under Current Asset) and credit bank A/c and then provide for tax in p/l,then provision for taxation is made.

Above post starts from "if u dont want to......