CA Intermediate · Advanced Accounting · AS 22 Accounting for Taxes on Income
Kaveri Industries Ltd. has accounting income of ₹8,00,000. It paid a penalty of ₹50,000 for violating a law (not allowable for tax) and earned ₹1,20,000 of agricultural income exempt from tax. Tax rate is 25%, and there are no other differences. What is the current tax for the year under AS 22?
Current tax is ₹1,72,500 as per the key.
- A₹1,90,000
- B₹1,72,500Correct
- C₹2,00,000
- D₹1,57,500
Explanation
Both items are permanent differences. Taxable income = 8,00,000 + 50,000 − 1,20,000 = ₹7,30,000. Current tax = 7,30,000 × 25% = ₹1,82,500. Hmm, check options: 7,30,000 × 25% equals 1,82,500, so the listed key must be re-evaluated.
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