Advance tax and provision for tax

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Querist : Anonymous

Querist : Anonymous (Querist)

03 January 2013 Advance tax entries should be transferred to provision for tax A/c at the year end or after completion of assessment?

Anand

Anand (Expert)
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03 January 2013 Advance tax entries should be transferred to provision for tax a/c only after completion of assessments.
Some organisations have a policy of awaiting the final settlement of the matter if it goes through the appeal process.
THe advantage of doing this is that the books accurately reflect the outstanding liability and assets.

Querist : Anonymous

Querist : Anonymous (Querist)

03 January 2013 If the actual Income tax is greater than Provision then what will be the treatment?

Querist : Anonymous

Querist : Anonymous (Querist)

03 January 2013 If the actual Income tax is greater than Provision then what will be the treatment?

Anand

Anand (Expert)
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03 January 2013 you will have to create additional provision to that extent by say

P&L A/c .....dr
To Provision for Tax A/c

advance tax a/c ....dr
to Bank a/c
for tax paid

The P7L hit will be a below the line item stating it to be a short provision of income tax for earlier years

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