06-25-2007, 09:44 PM
Dear Dhoom,
Since I dont find this forum a place to solve these academic questions, I have not so far given my views on the question. Notwithstanding the actual question I have following view
Export rebate is not a rebate in the context of IAS 2 as it is not a reduction towards the price paid on acquiring the stocks. Rather, it is a rebate in respect of certain duties and taxes. Export rebate has to be a part of revenue/sales or Other Operating income as per some selected opinion issued by ICAP. Export rebate is allowed by government and not by supplier. This has to be claimed from Customs department on export sales realization as per rates allowed in the notifications issued in this regard.
Withholding tax/Tax deducted at source is adjustable against income tax liability of a given period. Therefore, when it is withheld or dedcuted, it has to be treated as an asset "ADVANCE INCOME TAX" in the books of account. When income tax return (or some statement under PTR) is filed, the advance tax to the extent of the income tax liability/provision is adjusted against such provision/liability and remaining balance, if any, continues to be treated as advance income tax. This adjustment is more logical when the new income tax ordinance (ITO2001) has made the filing of return, as the assessment of an assesse in a style of self assessment.
Advance tax can also be shown net of provision for taxation in the financial statements.
Best regards,
Since I dont find this forum a place to solve these academic questions, I have not so far given my views on the question. Notwithstanding the actual question I have following view
Export rebate is not a rebate in the context of IAS 2 as it is not a reduction towards the price paid on acquiring the stocks. Rather, it is a rebate in respect of certain duties and taxes. Export rebate has to be a part of revenue/sales or Other Operating income as per some selected opinion issued by ICAP. Export rebate is allowed by government and not by supplier. This has to be claimed from Customs department on export sales realization as per rates allowed in the notifications issued in this regard.
Withholding tax/Tax deducted at source is adjustable against income tax liability of a given period. Therefore, when it is withheld or dedcuted, it has to be treated as an asset "ADVANCE INCOME TAX" in the books of account. When income tax return (or some statement under PTR) is filed, the advance tax to the extent of the income tax liability/provision is adjusted against such provision/liability and remaining balance, if any, continues to be treated as advance income tax. This adjustment is more logical when the new income tax ordinance (ITO2001) has made the filing of return, as the assessment of an assesse in a style of self assessment.
Advance tax can also be shown net of provision for taxation in the financial statements.
Best regards,
