Provision for income tax
This query is : Resolved
15 June 2010
I have one client which is a ltd. company. Suppose it has made provision for taxes for the year 2007-08 Rs. 150000/-. And the actual tax liability comes in the assessment of this company is Rs. 125000. So Rs. 25000/- is refunded by IT department with interest. Now the problem is what accounting entry is to be passed for Rs. 25000/- which is a excess provision? Whether it should be debited to provision for taxes account or it should be taken as income.
Thanks
Thanks
CA Sanat Pyne
(Expert)
15 June 2010
Entry will be
Prov for it...........Dr 25000
To, Reserve & surplus 25000
Bank A/c ............Dr 25000
Provsion for it......Dr 125000
To, Advance tax 150000
Prov for it...........Dr 25000
To, Reserve & surplus 25000
Bank A/c ............Dr 25000
Provsion for it......Dr 125000
To, Advance tax 150000
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