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Whether refund should in balance sheet or not?

CA Balram Sharma (CA) (839 Points)

05 December 2009

According to my assessment income tax is refundable to me, but actual assessment is not taken place.

Should my balance sheet would attract that refund amount or not,??

What should be accounting treatment.?

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6 Replies

MUTHUSAMY (CA FINAL & ACS FINAL) (253 Points)
Replied 05 December 2009

YOUR QUESTION IS NOT CLEAR,

Ansari (ca final) (444 Points)
Replied 05 December 2009

Clear ur ques.

(Guest)

dnt show it anywhere unless u recieve refund order from IT dept. bcz u have to follow realisation concept and conservatism concept.. It says dnt recognize any unrealised gain or income bt only record future losses. hence nothing is to be done unless its confirmed to be realised.

Hareesh H Sharma (Cleared IPCC..now article) (894 Points)
Replied 06 December 2009

Unless its sure to arise u cant recognize it as income...AS 9 revenue recognition also can be looked into i guess along wit conservatism concept...And as its our income tax dept u can never know !!!!!They might have a surprise waiting for u... :-)

CA Balram Sharma (CA) (839 Points)
Replied 09 December 2009

Originally posted by :MUTHUSAMY
"	YOUR QUESTION IS NOT CLEAR,	"

question is very clear,

according to my self assessment there is refundable amount to me, should i have to show this amount in my balance sheet or not?

Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8539 Points)
Replied 10 December 2009

You need not to show it as refund. But if you have refund on self assessment, then it means that your tax credit is more than tax liability. So, you can do one thing, create a provision for taxation and it shall be grouped under the head "Provisions". The taxes that you paid in advance and the TDS that was deducted from your income shall be shown under the appropriate head in Current Assets on Assets / Application of Funds side. In the year when the assessment is completed and you receive the refund, close these open accounts and tax provision against each other by accounting the difference to bank account as refund received. In case the refund amount differs from your estimation at the time of self assessment, then pass the difference through Profit & Loss account or Capital Account. if you need i can give you the accounting entries for the same also. But i hope its clear for you now.