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Interim income tax expense under Ind AS 34 is calculated using:
AA simple proportional allocation of the prior year's annual tax
BThe marginal tax rate applicable to the interim period only
CThe estimated average ANNUAL effective income tax rate, applied to the interim period's pre-tax income
DThe rate prescribed by SEBI for interim reporting
Answer & Solution
Correct answer: C. The estimated average ANNUAL effective income tax rate, applied to the interim period's pre-tax income
Income taxes are annual taxes. Interim tax = estimated weighted average annual effective tax rate × interim pre-tax income, re-estimated on a YTD basis. This blends progressive rate structures and substantively enacted future changes.
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