Hi..
I want to know that the profit which transfer to GR in the balance sheet, that profit should be after tax or before tax?
Thanks...
9 Replies
One Of A Kind
(CA Final & CS Professional Student)
(187 Points)
Replied 04 March 2014
The profit after tax is transferred to general reserve.
DEEPU HN
(Associates)
(360 Points)
Replied 04 March 2014
Usually Reserve calucated & Transfered to capital after computation of income tax..
Thank you
CA Chirag
(Chirag Sheth & Associates)
(1183 Points)
Replied 04 March 2014
Of course after tax.it is below line item.
Vasu Goyal
(Student)
(38 Points)
Replied 04 March 2014
Transfer to GR is an appropriation of profits.... while tax is a charge against profit as it is on the profit itself... hence first tax is deducted then out of remaining amount is transferred to GR....!!!!!
mukthar
(kallikkandy)
(33 Points)
Replied 04 March 2014
It is transferred after adjusting corporate dividend tax
Stranger
(.)
(5531 Points)
Replied 04 March 2014
Sir, transfer to G.R. is an appropriation of profit [i.e. below the line item which appears in P & L (Appropriation) A/c] & should always be 'after tax', i.e., after making provision for income tax [i.e., above the line item which appears in P & L A/c] during the F.Y. But as far as the taxability is concerned, transfer to G.R. is taxable as its not an expenditure which can be said as charge against profit but only an appropriation of profit.
Hope your doubt is clear now.
Supriyo Banerjee
(Manager)
(25 Points)
Replied 07 March 2014
Of course transfer to GR is after tax. Had it been before tax, the business houses could use the practice by transferring a large part of earning in GR and paying a negligible amount to the Govt. as Income Tax or even avoid paying the tax. So, in commonsence and also in accounting, taxation angle it is after tax
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