What will be the treatment of advance tax in case of cash flow statement?\r\n
Main Category: Accounts |Sub Category: Others |Reply Count: 1 |
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BMC Associates says Replied on 25th July,2026 10:31 AM
Advance tax paid is generally classified as cash flows from operating activities in the Cash Flow Statement, as it relates to the income taxes arising from the entity's normal business operations.
As per Ind AS 7 / AS 3 – Cash Flow Statements, cash flows relating to income taxes are usually disclosed under operating activities, unless they can be specifically identified with investing or financing activities. Therefore, advance tax paid is shown as an outflow under operating activities. If the advance tax exceeds the actual tax liability, the excess is recognized as a tax asset (refund receivable), but the cash payment itself continues to be reported as an operating cash outflow.
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BMC Associates says Replied on 25th July,2026 10:31 AM
Advance tax paid is generally classified as cash flows from operating activities in the Cash Flow Statement, as it relates to the income taxes arising from the entity's normal business operations. As per Ind AS 7 / AS 3 – Cash Flow Statements, cash flows relating to income taxes are usually disclosed under operating activities, unless they can be specifically identified with investing or financing activities. Therefore, advance tax paid is shown as an outflow under operating activities. If the advance tax exceeds the actual tax liability, the excess is recognized as a tax asset (refund receivable), but the cash payment itself continues to be reported as an operating cash outflow. For expert guidance on cash flow statements, accounting standards, and taxation, businesses often rely on experienced chartered accountant firms in gurgaon. A qualified chartered accountant gurgaon, trusted ca firm in gurgaon, or professional ca in gurgaon can help ensure accurate financial reporting and compliance with applicable accounting standards.
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