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Accounting for Income tax refund


(Guest)

What will be the accounting entry for income tax refund in case of company?


 15 Replies


(Guest)

BANK AC------DR.

        TO CAPITAL ACCOUNT(WITH PRINCIPAL AMT.)

         TO INTT. ON REFUND AC.(WITH INTEREST AMT.)


(Guest)

Thanks for reply, but in case for company; how can we credit capital if provision for tax is already made.

Deeptika Kaushik (Practicing CA) (25 Points)
Replied 02 May 2011

Hi Manish,

Amount of Refund will be set off against the provision for tax created for the respective AY regarding which you have received the amount. Treat the difference as income / loss in P&L.

CA Raghavendra S S (Manager Accounts) (35 Points)
Replied 02 May 2011

Manish

Income Tax Refund is to be set off against Tax provision and Advance Tax paid and if any excess\ shortage is to be recgonised in P&L a/c


(Guest)
Originally posted by : CA Raghavendra S S

Manish

Income Tax Refund is to be set off against Tax provision and Advance Tax paid and if any excess\ shortage is to be recgonised in P&L a/c

AGREED

ANANDA VAIDYANATHAN (ACA) (216 Points)
Replied 03 May 2011

If income tax refund is received for any  year then the books of accounts for that particular year would have been closed by creating a  Income tax refund provision a/c after adjusting the advance tax paid and tds amount deducted for that company. Such a/c would show a debit balance.The name of the account could be Income tax refund a/c or balance with revenue authorities or it may have some other name. At the time of receiving the refund this a/c is credited and closed and the bank a/c is debited. The difference which is excess or short is taken to the revenue.

1 Like

CA Navin Jain (MANAGER (FINANCE & ACCOUNTS))   (11763 Points)
Replied 03 May 2011

PROVISION FOR INCOME TAX- DR

BANK A/C - DR

TO ADVANCE TAX -  (IF ANY)

TO TDS- (IF ANY)

TO INTEREST ON INCOME TAX REFUND

Azim Khan ACA,CS,CMA*,LLB* (Proprietor) (1312 Points)
Replied 03 May 2011

Amount of income tax refund will be credited to P&L account being an item of income in the year in which it is received. the same will be disallowed while calculating Income from Business under Income Tax Act.

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 22 May 2011

Originally posted by : CA Raghavendra S S

Manish

Income Tax Refund is to be set off against Tax provision and Advance Tax paid and if any excess\ shortage is to be recgonised in P&L a/c

agreed

Parthsarthi Patel (CA) (98 Points)
Replied 01 June 2011

Originally posted by : CA Azim Khan ACA., CS.
Amount of income tax refund will be credited to P&L account being an item of income in the year in which it is received. the same will be disallowed while calculating Income from Business under Income Tax Act.

 Dear Colleague,

 

How the income can be disallowed?

Further, all the accounts standing for the particular year viz adv tax, provision, TDS, Self Asst Tax should be closed and difference if any should be passed through P/L A/c...

CS,CA F,Numrologi TusharSampat (CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)   (85905 Points)
Replied 01 June 2011

Mr ParthSarthi Patel is correct.

SANDEEP GUPTA (article) (22 Points)
Replied 06 September 2014

what will be treatment in tax if refund is receivable as per last year balancesheet now cease

to be refunded ? eg custom refund accounted as income in previous year but in current year no refund to be received

Raj Singh (2 Points)
Replied 15 February 2020

WHAT WILL BE ACCOUNTING ENTRY FOR INCOME TAX REFUND IN CASE OF COMPANY

Rama chary Rachakonda (Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294)   (2905 Points)
Replied 22 February 2020

Debit Income tax refund account

 and credit profit or Loss account


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