Treatment of income tax refund
This query is : Resolved
06 June 2012
pl. tell me accounting treatment of income tax refund
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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