Suppose provision for tax of current year is given but there no information regarding the tax payment of previous year. so will we assume that the provision made for current year is equal to the tax paid of previous year

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Solution

Dear Student,

Provision for tax to be made for any year depends on profitability of that year and provisions of income tax applicable on that particular business;

Further payment of tax of previous year does not determine current years' taxability and therefore provision made for current year need not be necessarily equal to the tax paid of previous year;

But yes this may be the situation that previous years' tax provision is paid in current year!!

Regards,

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