Treatment of advance tax

This query is : Resolved

Nikhil Bhatia (Querist)
Follow

28 May 2014 Most Companies wrote
Advance Tax(NET OF PROVISION) in asset side &
Provision for tax(NET OF ADVANCE TAX)in Liability side at the same time,
what's the reason behind this?

Rupesh Jain

Rupesh Jain (Expert)
Follow

28 May 2014 when company make tax provision and pay advance tax agst this provision and prov. is less than its advance tax and its show assets side.

and when provision is greater than advance tax then its show liability side.

Nikhil Bhatia

Nikhil Bhatia (Querist)
Follow

28 May 2014 Dear Sir,
I already knew about this. But some companies shows both (Provsion for tax and advance tax) at the same time.Kindly check the annual accounts of Infosys or Dabur india.
and one more question whether companies write off their advance tax in next year or they wait for their assessment, .i.e. they accumulate their advance tax until their assessment came.
e.g One company have advance tax of Rs.100000 in the last year & the provision for tax is 150000 so the entry should be

Provision for Tax a/c dr. 150000
To Advance Tax A/c 100000
To Bank A/c 50000

But companies made entries

Provision for Tax a/c dr. 150000
To Bank A/c 150000

and adjust their advance tax at the time of assessment.
I want to Know the reason of this?