Income Tax REfund

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Saurabh Garg (Querist)
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31 July 2010 Wat would be the treatment for IT refund including Interest.????

In my opine Intrest would be Income from other sources . but wat abt Refund amount...??

Please guide

CA Sanat Pyne

CA Sanat Pyne (Expert)
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31 July 2010 YES YOU ARE RIGHT INTERET WILL TREATED AS INCOME FROM OTHER SOURCES.REFUND AMOUNT IS NOTHING BUT EXCESS TAX WHAT YOU PAID EARLIER.
THIS IS NOT TAXABLE.

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CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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31 July 2010 Refund amount need to credt against Income tax refund receivable(asset)in your books

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CMA.Palani Arumugam

CMA.Palani Arumugam (Expert)
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31 July 2010 In case of individual, income tax refund can be credited to capital a/c. I.T refund is not taxable. Only interest portion is taxable.

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Taranjit Singh

Taranjit Singh (Expert)
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31 July 2010 Income tax refund is not taxable. only interest on income tax refund is taxable, which comes under the head income from other sources

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Murtaza I Bhagat

Murtaza I Bhagat (Expert)
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31 July 2010 your refund amount is almost calculated in previous year income.... let me know with enty..

income cr...100 (P&L)(80+20)
bank dr..80
tds receiable dr..20 (assets)
now refund come
tds cr...20
int.cr...01 (Income)
bank dr..21

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CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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31 July 2010 AGREED WITH EXPERTS.
WELL EXPLAINED BY MR. MURTAZA

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Saurabh Garg

Saurabh Garg (Querist)
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02 August 2010 Sir thanx to all of you for kind reply

As Mr. Palami Sir told that in case of Individual it will br credited in Capital Account...

i want to know the exact treatement of refund In a Pvt. Ltd company..

Plzzz...

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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02 August 2010 In case of Pvt LTd company,.

Interst on Refund will be taxable as Indirect Income.

Murtaza I Bhagat

Murtaza I Bhagat (Expert)
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02 August 2010 agreed, as indirect income

Saurabh Garg

Saurabh Garg (Querist)
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03 August 2010 Sir sorry but i want to know abt the effect of Refund instead of int. on refund in case of Pvt. Ltd. Comp.

Plzzzz

Aditya Maheshwari

Aditya Maheshwari (Expert)
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03 August 2010 Refund amount need to credt against Income tax refund receivable (asset)in the books of the company. Some short / excess received should be transferred to the profit & loss a/c.

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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03 August 2010 If in books of company , Provision for income and advance income tax & tds is already adjusted and net income tax refund a/c is stands, then amount of refund credited to such a/c and balance short/excess t/f to profit & loss as Mr. Aditya ji speified above,

if provision for income tax and advance tax & tds for that year is stands as it in books,
then you have to make entry

Provision for Income tax Dr.
Bank A/c Dr.
To Advance Income tax & TDS
To Interst on Refund A/c
To profit & loss (if may be debited also in case of short provison)

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