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Accounting entry for income tax


Dhrunil Bhatt (Chartered Accountant)     16 August 2018

Dhrunil Bhatt
Chartered Accountant 
 11 likes  227 points

| My Other Post

Dear Colleagues,

I would like to pass an accounting entry for creation of provision for income tax as on 31-03-208 based on the below data :

1. Income Tax (computed) before TDS = Rs. 100,000

2. MAT Payable (computed) before TDS = Rs. 150,000

3. TDS Receivable = Rs. 20,000

4. Interest u/s 234A/B/C = Rs. 1,000

 

As per my view, the accounting entry should go like this:

Debit : MAT Credit Entitlement A/c ...Rs. 50,000

Debit : Income Tax Expense A/c ...Rs. 100,000

Debit : Interest Expense A/c ...Rs. 1,000

Credit : TDS Receivable A/c ... Rs. 20,000

Credit : Provision for Taxation A/c ... Rs. 131,000

 

Kindly correct if I am wrong somewhere.

 

Thanks and Regards,

Dhrunil Bhatt

avater

Abhishek5g (CA)     18 August 2018

Abhishek5g
CA 
 9 likes  167 points

View Profile | My Other Post

provision is not created for interest portion.. simply pass d entry MAT expense dr.150000
to provision for MAT 150000

1 Like

Dhrunil Bhatt (Chartered Accountant)     19 August 2018

Dhrunil Bhatt
Chartered Accountant 
 11 likes  227 points

View Profile | My Other Post

Dear Abhishek Sir,

I am very much thankful to you for your reply.

But still I am not understanding that why no provision should be created for interest. As interest relates to the tax of the PY, isnt it that the interest expense should be booked considering accrual concept of accounting.

 

Thanks and Regards,

Dhrunil Bhatt


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