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CMA Intermediate · Financial Accounting · Accounting for Taxes on Income (AS 22)

According to AS 22, which of the following is covered within the meaning of 'taxes on income' for the purposes of the Standard?

AS 22 defines taxes on income to include all domestic and foreign taxes which are based on taxable income. It is not limited to domestic taxes, and it does not extend to turnover-based indirect taxes or to taxes payable on dividend distribution.

  1. AOnly domestic taxes based on taxable income
  2. BAll domestic and foreign taxes which are based on taxable incomeCorrect
  3. CTaxes payable on distribution of dividends by the enterprise
  4. DIndirect taxes levied on sales turnover

Explanation

For the purposes of AS 22, taxes on income include all domestic and foreign taxes which are based on taxable income. Limiting it to domestic taxes is wrong because foreign taxes are expressly included. Dividend distribution taxes and turnover-based indirect taxes are not taxes based on taxable income.

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