Tax provision

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

31 August 2013 A Company has following figures at year end :

Advance Tax Paid : Rs.500000
TDS : Rs.100000

Self assessment tax comes out to 50000.

Now what would be entry for income tax provision at 31st March out of following :

1.Profit & Loss a/c Dr.50000
Provision for Tax Cr.50000
(in this Advance Tax & TDS adjusted from Reserves & Surplus)

or

2.Profit & Loss A/c Dr.650000
Provision for Tax Cr.650000

(in this Advance Tax & TDS are shown under Loans & Advances.)

What would be the most appropriate presentation.
Whether provision is to be made for net amount(as in (1) above) or for full amount including Advance Tax & TDS(as in (2) above)

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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04 September 2013 Second entry is correct. you need to create provision for complete tax, advance tax & tds can be adjusted at the time of payment

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