Provision For Income Tax
This query is : Open
17 January 2017
We are paying Advance Tax and after that fianlly we are paying Self Assessment Tax then why should we provide Provision for Income Tax
18 January 2017
Yes. If any short fall of Advance tax and actual tax liability after adjusting tds receivable extent payable can be made provision for the year, when you make payment in subsequent year as self assessment tax you can debit provisions and credit bank. Which nullify provision entry.
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23 January 2017
Income tax provision should be made for tax payable during the year. For e.g. if your tax cost is 100, of which 10 is deducted by TDS and you make balance payment of 90 by way of advance tax. then your tax provision should be made for Rs. 100/-
Thereafter, if you find that your tax cost is actually 110/- then the Rs. 10 you pay as SA tax should also be debited to advance tax and credit to bank. Simultaneouslly you will increase your tax provision also by debiting to Income Tax Expense A/c
Whenever your assessment is concluded based on the result of the same, you are to nullify the advance tax and TDS a.c against the tax provision account,.
Thereafter, if you find that your tax cost is actually 110/- then the Rs. 10 you pay as SA tax should also be debited to advance tax and credit to bank. Simultaneouslly you will increase your tax provision also by debiting to Income Tax Expense A/c
Whenever your assessment is concluded based on the result of the same, you are to nullify the advance tax and TDS a.c against the tax provision account,.
26 January 2017
Thank for your valuable information Sir.
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