Sir I have found two different treatments in respect of IT payment. 1. Posting to P& L account 2. Posting to capital of Proprietors/Individual (in case of sole proprietary firm). please clarify the difference 🙏
Replies (4)
Quick Summary
This discussion clarifies the treatment of Income Tax (IT) payments for businesses. It highlights two main approaches: posting to the Profit & Loss account or directly to the proprietor's/individual's capital account. For sole proprietorships, IT is typically debited to the Capital account. In partnership firms, the IT payment is apportioned among partners according to their profit-sharing ratio, with the profit after tax then transferred to individual partner accounts.