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

Save Share

This query is : Resolved

Daya (Querist)

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.

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

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**.

---

### 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.*

---

### 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 |

---

### 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.

---

### 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).

---

### 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.

---

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

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now