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Provision's

Kapil Dhiman (Accountant) (304 Points)

10 December 2014

Hi ,

In our company last year Provision for income tax is created already and it is still showing advance tax for F Y 2013-14 in Balance Sheet .

Please explain what is the procedure to do entry when balance sheet is final it contain Advance tax and provision for income tax for F Y 2013-14.

As i think If company balance sheeet is final for F Y 2013-14 then It means Profit of company is known to accountant so why it is still showing in Provisions for income tax and advance tax of company in balance sheet , Is it correct or not ?

Please give reply as soon as possible

Its most urgent for me

As i thinking,

As balance sheet is final then It only contain's Tax refundable/ Tax payable entry.

Thanks in advance

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2 Replies

V P Narasimhan (Accounts Manager) (791 Points)
Replied 02 January 2015

Dear

At the time of Finalisation I T Liablity would have been worked out based on the Profit. So, while Payment the Advance Tax (if it pertains the particular year) might have been deducted & balance alone will be paid. Hence Provisions & Advance Tax need not appear. It's better to have a Common A.c viz., Income Tax and pass the netries there to wipe out the things.