Account for IT Refund
ARITRA CHAKRABORTY (Article Trainee) (203 Points)
01 November 2020
How to account for IT refund?
ARITRA CHAKRABORTY (Article Trainee) (203 Points)
01 November 2020
Rama chary Rachakonda
(Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294)
(3316 Points)
Replied 01 November 2020
Make an accounting entry for tax refund money
You will debit an asset account and credit the originally debited account for the taxes paid. To show that you received a tax refund, use the following entries: Debit the cash account. Credit the income tax expense account.
prasad Nilugal
( GST Practitioner & Accounts )
(14221 Points)
Replied 01 November 2020
process of refund this F.Y and next F.Y
1) Advance Income Tax A/c Dr
To Bank A/c Cr
( Advance Tax paid )
2) Expense A/c Dr
TDS A/c Dr
To Bank A/c Cr
( Expense paid also TDS Deducted )
On 31st March provision Entry
Income Tax A/c Dr
Income Tax payable A/c Cr
( provision entry on 31st march )
on 1/4/2020 Advance Tax A/c , TDS A/c debit balance and Income Tax payable credit balance will be Carried forward in the next F.Y because assessment will be done next year .
After assessment in the next year , Adjustment entry will be
Income Tax payable A/c Dr
To Advance Tax A/c Cr
To TDS A/c Cr
( Income Tax payable will be adjusted against paid )
Excess Tax paid refundable entry will be
Income tax payable A/c Dr
To Income Tax refund A/c Cr
( excess tax paid refundable )
When we received refund as per your query refund entry will be
Bank A/c Dr
To Income Tax payable A/c Cr
( Income Tax refund Cheque no ...)
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