Treatment of income tax refund
This query is : Resolved
CA. Mayank Jindal
(Querist)
06 June 2012
pl. tell me accounting treatment of income tax refund
Ca Anand Dubey
(Expert)
06 June 2012
Tax refund is not an Income you can credit the a/c head income tax refundable if you have created it or in proprietorship / partnership can be adjusted in drawing
06 June 2012
The following is the whole chain of transactions:
1. Advance Tax
Advance Tax AY A/c Dr
To Bank
2. TDS
Bank A/c Dr
TDS Receivable A/c Dr
To Debtor
3. Provision for Income Tax
P&L A/c Dr
To Provision for Income Tax
Let us assume the following figures:
Advance tax - Rs. 10 lakh
TDS - Rs. 20 lakh
Final tax liability - Rs. 15 lakh
Refund - Rs. 15 lakhs
4. Refund
Provision for Income Tax A/c Dr 15 lakh
Bank A/c Dr 15 lakh + Interest
To Advance Tax 10 lakh
To TDS Receivable 20 lakh
To Interest on Refund
1. Advance Tax
Advance Tax AY A/c Dr
To Bank
2. TDS
Bank A/c Dr
TDS Receivable A/c Dr
To Debtor
3. Provision for Income Tax
P&L A/c Dr
To Provision for Income Tax
Let us assume the following figures:
Advance tax - Rs. 10 lakh
TDS - Rs. 20 lakh
Final tax liability - Rs. 15 lakh
Refund - Rs. 15 lakhs
4. Refund
Provision for Income Tax A/c Dr 15 lakh
Bank A/c Dr 15 lakh + Interest
To Advance Tax 10 lakh
To TDS Receivable 20 lakh
To Interest on Refund
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