AA-43 Income Tax Expense

All Respected Members,

hope you all will be fine with good health and doing well.

please educate me on following:

one of my friend told me that their tax consultant asked him to take tds as income tax expense and less it from gross profit same like indirect expenses.

He did the same. he created ledger income tax expense under indirect expense group and adjust it with tds account which was in assets side of balance sheet.

but when he check the tax liability it is more than tds deduction.

he is facing this issue that when he adjusted income tax expense account as indirect expense. a profit value come out but when he found that tax liability is more than tds. he deposited short tax payment but upon this payment profit reduce more from earlier whereas he filed the return with tds of earlier.

please educate how should he take entry to reduce more Profit amount due to short tax payment.

thanks in advance for your precious time and efforts.
Replies (3)
Quick Summary
This discussion addresses a common accounting query regarding the treatment of income tax expense. A user's friend incorrectly booked TDS as an income tax expense, leading to discrepancies when actual tax liability exceeded TDS deducted. The core issue is how to accurately record tax payments and adjust profit accordingly, especially when short tax payments are made. The thread aims to provide guidance on correct accounting entries for income tax.

Put it in tax section for more clarity

Income tax expense .
to reduce clarity.

I told u to put it in taxation. All the ex vetrans who started caclub are in old age homes or homeless now. Cant expect quality anymore here. 

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