Saturday, February 4, 2012

AS 22

Accounting Standard 22 - Accounting for Tax of Income Accounting income is different from taxable income because way of calculating taxable income under income tax law does not include many expenses and income items for preparing statement of profit and loss . So, ICAI has made this standard - AS 22 with the name of Accounting for tax of Income . In this accounting standard 22 , accountant is also responsible to follow the rules of Income tax law for preparing statement of profit and loss . After this he will calculate income tax according to the corporate tax rates . In corporation , income tax is loss of business and it must be debited in statement of profit and loss . Taxable income must be calculated under the provisions of income tax law 1961 . 1. Some expenses which are not deducted for the purpose of calculating income tax will not be debited in profit and loss account . 2. Depreciation must be calculated on the basis of written down method of depreciation. If company calculates it on straight line method , then company accountant will calculate deferred tax and it will be addition charge on company . 3. There are also many incomes which will not show in statement of profit and loss for calculating taxable income . These income will not shown in profit and loss statement for calculating income tax purposes .

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