Last years income tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 March 2015 If in the opening Balance Sheet The Provision of Income Tax is Rs.15000/- and at Present after self assessment i have Paid Rs. 17000/- what should be the accounting entry should i pass in Tally.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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18 March 2015 Dr:Provision for Income tax Rs.15000
Dr:Income tax Rs.2000
Cr: Bank Rs.17000

Querist : Anonymous

Querist : Anonymous (Querist)

19 March 2015 But what is the Group of Income Tax of the Previous year, is it Indirect Expenses.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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19 March 2015 It is appropriation account. it can be directly debited as profit & loss account also. as direct entry

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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20 March 2015 it is not indirect tax but a charge on profit.

Querist : Anonymous

Querist : Anonymous (Querist)

20 March 2015 so how i can i pass the journal entry in Tally.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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02 August 2024 In Tally, to account for the difference between the provision for income tax and the actual tax paid, you need to adjust the provision account and reflect the actual payment. Here’s how you can handle this:

### **Accounting Entries:**

1. **Initial Provision:**
- **Provision for Income Tax**: This account reflects the estimated amount of income tax liability for the year.

```plaintext
Dr. Income Tax Expense Rs. 15,000
Cr. Provision for Income Tax Rs. 15,000
(Being provision for income tax created)
```

2. **Actual Payment of Income Tax:**
- **Actual Payment**: This entry reflects the payment made to the tax authorities which may differ from the provision.

```plaintext
Dr. Provision for Income Tax Rs. 15,000
Dr. Income Tax Expense Rs. 2,000
Cr. Bank Account Rs. 17,000
(Being actual income tax paid; Rs. 2,000 being the additional amount over the provision)
```

### **Steps to Pass the Journal Entry in Tally:**

1. **Open Tally:**
- Go to the **Gateway of Tally**.

2. **Create Accounts (if not already created):**
- **Provision for Income Tax**: Go to **Accounts Info** > **Ledgers** > **Create**.
- **Income Tax Expense**: Similarly, create if not already available.
- **Bank Account**: Ensure this is created for recording payments.

3. **Pass the Journal Entry:**
- Navigate to **Accounting Vouchers**.
- Select **Journal** from the voucher types.
- Enter the following details:
- **Debit**: Provision for Income Tax (Rs. 15,000)
- **Debit**: Income Tax Expense (Rs. 2,000)
- **Credit**: Bank Account (Rs. 17,000)
- **Narration**: Provide a description such as "Adjustment of income tax provision and payment of actual tax."

4. **Save the Entry:**
- After entering the details, review the entry and save it.

### **Explanation:**

- **Provision for Income Tax**: Reduces by the amount initially provided (Rs. 15,000) and any excess amount paid over this provision is treated as an additional expense.
- **Income Tax Expense**: Captures the difference between actual payment and provision (Rs. 2,000 in this case).
- **Bank Account**: Reflects the actual payment made.

This approach ensures that your books accurately reflect the income tax provision, the actual payment, and any adjustments needed for the difference between them.

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