Question

How we treat income tax paid in advance in cash flow statement?

Answer 1

Advance paid in advance is a current asset.

In cash flow statement, when you adjust for change in working capital (current assets and current liabilities). You don't need to adjust for change in advance tax account.

What you do is you only deduct actual payment of tax, whether advance or not, is shown as outflow after all adjustments for change in working capital.

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