Treatment of income tax refund recieved

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Querist : Anonymous

Querist : Anonymous (Querist)

18 February 2015 Hi,
My client has received a refund of approx. 20 lacs, during the year. There was no receivable standing in the books. Whether the amount received is capital receipt or revenue receipt?
What should be the accounting entry to record this transaction?

Thanks

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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18 February 2015 If tax payment is revenue refund will also be revenue.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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18 February 2015 if it is prop business then it will be crdited to capital account as it is not revenue reciept and it is not chargeable to tax.

Remember interest receievd on income tax refund is taxable as income from othe resources.

Querist : Anonymous

Querist : Anonymous (Querist)

18 February 2015 Its a pvt company. Should the amount received be credited to Reserve & Surplus ??

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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18 February 2015 the ans is no as then it will be adjusted in provision for tax made earlier.

https://www.caclubindia.com/articles/taxation-entries-15351.asp#.VORQ2OaUdic

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