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)
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
(Expert)
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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