Income tax refund

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 June 2012 Dear All
Partnershi firm f in the filled return for AY 2008-09 there is no provision of income tax but TDS is stand Balance sheet . in the year 2011-12 Assesss received refund from the income tax . give the the journal entry . how is thr=e treatment of above entry

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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20 June 2012 Bank A/c Dr
To TDS Receivable A/c

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

20 June 2012 Dear BhardwajJee
I am Not Agree with you .
Because there in no provision of TDS in the P/L A.C TDS is stand in the Balance Sheet as on Year 2008-09, TDS amount is 2011272,, But the asset. is passed in the year 2011-12, The Refund amount is 301321.
please give me Journal Entry of the above cases

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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31 July 2024 To account for the refund received from the Income Tax Department in a partnership firm's books, you need to make journal entries reflecting the TDS refund. Here's how you can do it:

### 1. Recording TDS Receivable in AY 2008-09
Assuming the TDS amount was already recorded as a receivable in the balance sheet during AY 2008-09, the entry would be:

```plaintext
TDS Receivable Account Dr
To P&L Account (or respective income account)
```

### 2. Receipt of Income Tax Refund in FY 2011-12
When the refund is received in FY 2011-12, the entry would be:

```plaintext
Bank Account Dr
To TDS Receivable Account
```

### Detailed Journal Entries:

1. **Recording TDS Receivable (AY 2008-09)**:
```plaintext
TDS Receivable Account Dr [Amount]
To Income Tax Payable Account [Amount]
```

This entry assumes that the TDS deducted was not claimed earlier and it remains in the balance sheet.

2. **Receipt of Income Tax Refund (FY 2011-12)**:
```plaintext
Bank Account Dr [Refund Amount]
To TDS Receivable Account [Refund Amount]
```

### Example:

Assume the TDS receivable amount was Rs. 10,000.

1. **In AY 2008-09** (when TDS was deducted but not claimed):
```plaintext
TDS Receivable Account Dr 10,000
To Income Tax Payable Account 10,000
```

2. **In FY 2011-12** (when the refund is received):
```plaintext
Bank Account Dr 10,000
To TDS Receivable Account 10,000
```

### Treatment in the Balance Sheet:
- In AY 2008-09, the TDS Receivable would be shown under "Current Assets" as a receivable.
- In FY 2011-12, once the refund is received, the TDS Receivable will be cleared from the books, and the bank balance will increase by the amount of the refund.

By making these entries, you correctly reflect the transaction related to the TDS refund in the firm's accounts.

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