- This topic has 1 reply, 2 voices, and was last updated 8 years ago by
.
- Posts
Kindly clarify the below dobt:-
Given data:
Mr.X 1/1/2016 to 30/6/2016 income per month – 800 1/7/2016 to 31/12/2016 per month income – 1200 There after 2000 per month
Accounting Period ending – 30/4/2016
What will be the taxable income for the year 16/17 ?
As per my calculation it is (Period – 1/1/2016 to 31/12/2016 ) – 12000 ( 800*6+1200*6)
But in one text (BPP) it is given as 14,400 (4*800+(800*2+1200*6+2000*4)/12*8)
I understand the calculation, but could not digest why it is really required ? in the question itself we have been given the monthly income and instead of considering them directly, they have calculated the ANNUAL income and then calculate proportionately .
Can you find my calculation more logical ? Kindly clarify if not
You must firstly compute what are the profits for each ACCOUNTING period for those are the profits that will be computed and declared – NOT profits on a monthly basis. The opening period of 4 months to 30 April 2016 will therefore be a profit of 3,200 and the profits for the accounting year ended 30 April 2017 will be 16,800
The basis of assessment in 2016/17 (the 2nd tax year of trading) will be the profits of the first 12 months BASED on the tax adjusted trading profits that arose in the accounting periods, computed as follows:2016/17 (1st 12 months)
(1.1.16 – 31.12.16)= 3,200 + (8/12 x 16.800 = 11,200) = 14,400
It is not a question of your calculation being more logical – your calculation simply does not exist!!
- You must be logged in to reply to this topic.