Why income tax refund is subtracted from 

1.tax paid 

2.provision for tax 

In cash flow statement?

Asked by ravimundrakd | 10th Apr, 2020, 12:54: AM

Expert Answer:

While preparing a Cash Flow Statement, Income Tax Refund is deducted from Profits in Operating Activities and Deducted from Income Tax Paid.
Such Income Tax relates to the operating activities of a business and therefore, any refund towards such Income Tax should also be treated as an operating activity.
The amount of refund reduces the amount of total tax liability paid and therefore, is deducted from the tax paid as well.

Answered by Surabhi Gawade | 10th Apr, 2020, 10:22: AM

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