Journal entry in the case of individuals for Tax payment and refund

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Daya (Querist)
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02 October 2024 whether Journal entry in the case of individual can be passed while maintain his books of accounts
for LLP TDS, , TCS Advance Tax and self Assessment Tax

Firm Expenses Dr
To LLP A/c
and in the case of Tax Refund
LLP A/c Dr
To Firm Expenses
Is correct way to accounting.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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12 August 2025 Thanks for the question! Here's how the **journal entries for tax payments and refunds** should be treated when individuals maintain their books, especially for LLP-related taxes like **TDS, TCS, Advance Tax, and Self Assessment Tax**.

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### 1. **Tax Payments (TDS/TCS/Advance Tax/Self Assessment Tax)**

* When you pay **taxes** on behalf of the LLP or firm, these are considered payments made on behalf of the firm, so:

**Entry:**

| Particulars | Debit | Credit |
| --------------------------------------- | ----------------- | ------ |
| **Firm Expenses (Tax Payment Account)** | XXX (amount paid) | |
| **To Bank / Cash** | | XXX |

*When recording the payment.*

If you want to record that the payment was made by the individual on behalf of the LLP, you may pass:

| Particulars | Debit | Credit |
| -------------------------------------------------------------- | ----- | ------ |
| **Firm Expenses (Tax Payment)** | XXX | |
| **To LLP A/c (Partner’s/Member’s Capital or Current Account)** | | XXX |

*Meaning LLP owes the individual for the tax paid.*

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### 2. **Tax Refund Received**

* When the **tax refund** is received from the tax authorities, it reduces the tax expenses paid earlier. So the refund is income for the firm or LLP.

**Entry:**

| Particulars | Debit | Credit |
| ------------------------------------------ | ----- | ------ |
| **Bank / Cash** | XXX | |
| **To Firm Expenses (Tax Payment Account)** | | XXX |

*To reverse the earlier expense since the refund has come.*

If you want to adjust with the individual account (if previously tax payment was recorded as firm expense and LLP owes the individual), then:

| Particulars | Debit | Credit |
| ----------------------------------------------- | ----- | ------ |
| **LLP A/c (Partner’s Capital/Current Account)** | XXX | |
| **To Firm Expenses (Tax Payment Account)** | | XXX |

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### Your proposed entries:

* **Firm Expenses Dr To LLP A/c** (for tax payment)
✔️ This is correct if you are treating tax paid by individual on behalf of LLP as firm expense and LLP owes the individual.

* **LLP A/c Dr To Firm Expenses** (for refund)
✔️ This is correct to adjust the refund against earlier tax expense.

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### Summary:

* **Tax paid on behalf of LLP by individual:** Debit tax expense, credit LLP account (liability towards individual).
* **Tax refund received:** Debit LLP account, credit tax expense (reducing expenses).

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### Additional Notes:

* Maintain separate ledger for **Tax Payments / Advance Tax / TDS paid** for clarity.
* If tax is directly paid from LLP bank account, no individual accounting required; just tax expense and bank.

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If you want, I can draft sample ledger format or detailed entries for LLP tax transactions. Would that help?

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