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Provision for tax accounting
Why provision for tax is shown in profit and loss account, although it is part of appropriate of profit?
Replies (6)
It is also not included by income tax in calculation of business income.
INCOME TAX PAYMENT IS A PERSONAL EXPENDITURE IT IS DISALLOWED AND IT IS AN AMOUNT OF PAYMENT WHICH MADE AS AN APPROPRIATION BEING PERSONAL EXPENSES.
Thanks sunita, But I was asking for provision for tax,as it is made out of profit loss account.
Like entry of provision
P/L a/c dr
To provision for tax
Thanks sudipta, But I was asking for provision for tax,as it is made out of profit loss account.
Like entry of provision
P/L a/c dr
To provision for tax
Payment of taxes for the current year is made after the financial year end I.e. 31st march,in the next f.y.As per AS29 a provision is created for writing of estimated expense to be incurred due to income earned during the f.y.which is a past event
thank you for clarifying .
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