Expense provision written off under 44Ad
This query is : Resolved
22 September 2025
My previous ca has created many expense payable provision although i have opted sec 44ad but this expense provision is not going to be paid and nor expense can be claimed in sec 44ad how to adjust this provision in my balancesheet that it disappear in balance sheet
22 September 2025
Kindly anyone who can suggest right inputs regarding this problem and how I can solve it
22 September 2025
If you are filing ITR under presumptive assessment, you are not required to fill Balance sheet in ITR, except few details like creditors, debtors, cash or bank balance.
In practice, the provisions gets adjusted or nullified as and when the they are paid off in next FY.
In practice, the provisions gets adjusted or nullified as and when the they are paid off in next FY.
22 September 2025
Sir but what treatment we can do now for the provision remains in b/s when I have been in 44ad and the expenses are presumed how to write off the provisions and what implications stands for provisions after writing off
22 September 2025
Taxpayers under Section 44AD are not required to maintain detailed books of accounts or audit, so making accounting provisions becomes optional for statutory compliance and management, not for tax purposes.
Any opening or closing provisions in the balance sheet do not impact the computation of taxable business income under the presumptive scheme.
Write-off or reversal of old provisions in the books (e.g., when a liability is settled or written back) has no effect on tax calculations if Section 44AD applies.
Any opening or closing provisions in the balance sheet do not impact the computation of taxable business income under the presumptive scheme.
Write-off or reversal of old provisions in the books (e.g., when a liability is settled or written back) has no effect on tax calculations if Section 44AD applies.
22 September 2025
Old provisions in the balance sheet can be written off using specific journal entries, which depend on the type of provision and the reason for the write-off. The process ensures that provisions no longer required are cleared from the accounts, making the financial statements more accurate.
Steps to Write Off Old Provisions
Identify the Provision: Determine the provision that is no longer needed (e.g., excess provision for expenses, provision for doubtful debt, or other outstanding liabilities).
Pass Journal Entry: To write off, debit the provision account and credit the related expense or liability account.
Steps to Write Off Old Provisions
Identify the Provision: Determine the provision that is no longer needed (e.g., excess provision for expenses, provision for doubtful debt, or other outstanding liabilities).
Pass Journal Entry: To write off, debit the provision account and credit the related expense or liability account.
22 September 2025
Example
If ₹10,000 was provided last year for an expense but only ₹9,500 was paid:
Debit Provision for Expense ₹10,000.
Credit Bank A/c ₹9,500 (amount paid).
Credit Write-off (or Expense) A/c ₹500 (provision not required)
If ₹10,000 was provided last year for an expense but only ₹9,500 was paid:
Debit Provision for Expense ₹10,000.
Credit Bank A/c ₹9,500 (amount paid).
Credit Write-off (or Expense) A/c ₹500 (provision not required)
22 September 2025
Good luck..
22 September 2025
What effect will give if I write off the expense payable provision of my b/s as it’s increasing the capital balance what to do here
22 September 2025
Yes it can be written off with either the relevant expense or in other words with P&L account.
22 September 2025
Which mean it will be added to income in p&l or can be adjusted in capital account
22 September 2025
Cannot be added to capital account without payment of liable tax..
22 September 2025
My ca has claimed expense under 44ad although it was meant to be presumptive for 8% but now expense provision has been created in balance sheet which was not needed so what to do with these provisions for adjustment if no maintenance of books is required as per law but kept for internal records
22 September 2025
My ca has claimed expense under 44ad although it was meant to be presumptive for 8% profit without maintenance of books but now expense provision has been created in balance sheet which was not needed so what to do with these provisions for adjustment if no maintenance of books is required as per law but kept for internal records
23 September 2025
You can adjust them with capital account; as no additional tax liability.
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