Treatment of last year advance tax & tds

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

21 August 2012 What effect should be given in case TDS and Advance Tax Paid of last year to be adjusted in this financial year in case of private limited company.

S Sivasalapathy

S Sivasalapathy (Expert)

21 August 2012 Both should be seperately showen in b/s till assessement order.

Querist : Anonymous

Querist : Anonymous (Querist)

21 August 2012 and after assessment order?...as assessment is complete u/s143

Querist : Anonymous

Querist : Anonymous (Querist)

21 August 2012 and after assessment order?...as assessment is complete u/s143

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

02 August 2025 After the assessment is completed under Section 143, the treatment of **Advance Tax** and **TDS** paid in the previous year but adjusted in the current financial year for a private limited company is as follows:

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### Before Assessment Order (Pending Assessment)

* Advance Tax and TDS are shown as **Assets (Receivables)** in the Balance Sheet under **"Advance Tax & TDS Receivable"** (i.e., Tax Paid in Advance).

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### After Assessment Order (Assessment Completed under Section 143)

* The tax authorities have finalized your tax liability.
* **Advance Tax and TDS paid become final adjustments against tax liability**.
* The amount will no longer be shown as an asset in the Balance Sheet.
* Instead, it will be **adjusted against the tax liability for the year**.
* If any excess amount remains after adjustment, it will be shown as **Refund Receivable** from the Income Tax Department under **Current Assets**.
* If the company has any tax payable after adjustment, it will be shown as **Current Liability**.

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### Summary:

| Stage | Treatment in Financial Statements |
| -------------------------- | ------------------------------------------------------------------------------------------------------- |
| Before Assessment | Advance Tax & TDS shown as Tax Assets (Advance Tax & TDS Receivable) |
| After Assessment (u/s 143) | Adjusted against Tax Liability; excess shown as Refund Receivable or net tax payable shown as Liability |

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**Note:** This treatment aligns with accounting principles where tax payments are recognized as assets till the final tax liability is confirmed. After assessment, it becomes part of final tax expense and liabilities/refunds.

Would you like a sample journal entry for the adjustment post-assessment?

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