Tax on income from business

Problem of cash shortage ? you should ask your CA for the same. cash shortage for what ?

Your CA has adviced you this as he wants to show some expense over your booked inocome. Just think now, Eg:  profit is 30 which is lying in bank A/c but to earn this if you have to show expenses " may b through your bank A/c" or "Cash". Suppose if you did via banking channel then well n good, but if not then you might have paid through cash. Hence , you used your CASH bal from last B/S. So this year u have income in liab side under "Capital" and the same is in lying in Bank a/c reflected in Asset side, under Bank Bal., so sumthing has to be adjusted to effect your cash expenses, and thats were your CASH BALANCE BECOMES NEGTIVE. Think about the Financial Structure Flow of Money i.e P/L, Capital A/c, B/S....

16 lacs bank balance means it was generated through the business profit , 

if you are feeling easy to pay tax on this amount then no need to worry, 

if you feel that you have paid expenses from your own pocket, then withdraw that money and neutralize the expenses with the income, 

only  profit can be retained or the balance of creditors over debtors, if its found in excess then taxable 

if you not withdrawl your money from Bank a/c then it should be treated as income. thats wht Ur CA advised this because he can show expenses in B/S as paid through Cash.

Originally posted by : Arun choudhary
	if you not withdrawl your money from Bank a/c then it should be treated as income. thats wht Ur CA advised this because he can show expenses in B/S as paid through Cash.

Can the withdrawn money be invested in MF, Fixed deposit etc.

U have two option -and your CA is correct.

otherwise pay today Tax on income along with interest.

YES RAHUL YOU CAN DEPOSIT IN MF OR OTHER FD FOR DEDUCTION OF 80C & OTHER DEDUCTIONS BUT IT SHOULD BE BEFORE 31st MARCH 2016. ANOTHER YOU CANT TAKE ITS BENIFIT IN FY 15-16

You must have given details of your income and expenses of your business to CA. These details are not here.

Tax is not on the amount deposited in your Bank account. Your CA must have constructed P&L account and computed taxable profit and based on that he must have advised you.

If his advise sounds doubtful you can show all the details to another CA or Tax Consultant for advice.