Provision For Income Tax

Save Share

This query is : Open

M.Ashok kumar Reddy (Querist)

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

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)

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.

Message likes : 1 times

Anand

Anand (Expert)

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,.

M.Ashok kumar Reddy

M.Ashok kumar Reddy (Querist)

26 January 2017 Thank for your valuable information Sir.

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