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Provision for income tax

Arundhati Raychaudhuri (no designation) (340 Points)

15 October 2011

is it compulsory to create provision for income tax in case of individuals or partnership firms? if it is not done what 'll be the after effects?

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4 Replies

C.A SHASHANK GOYAL (Chartered Accountant) (362 Points)
Replied 16 October 2011

Hi , Not compulsory to make the provision for income tax for the tax purpose as it is also disallowed under the provision of section 40 but as per the accounting standard 22 I.e accounting for tax purpose following accrual principle we need to record the provision for income tax .

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Arundhati Raychaudhuri (no designation) (340 Points)
Replied 16 October 2011

ok, but if someone forgets to create provision, will it be a big deal? the thing is if i create provision now then i have to revise itr.

Diwakar Mishra (Accountant) (136 Points)
Replied 16 October 2011

Thanks Mr. Goyal..

But i have a query .... Accounting starndars are also applicable to Individual and partership Firm ?? If yes

Arundhati have to revise thier accounts and income tax returns because thier accounts are showing true and fair picture.

Kindly advice

Rahul Gupta (Chartered Accountant) (644 Points)
Replied 16 October 2011

@ Arundhati

Look ITR will be filed for the date up to 31st March right but if afterwards you wants to create provision that you have to do so w.e.f from 01st April i.e. it will not effect the previous balance sheet as well P&L

So there will be no requirement to revise itr. If you want to show the effect from previous year than it must be done before filing the ITR otherwise Revising the ITR and B/s P&L just for creating a provision for IT which is disallowed Expenditure is not advisable.