Advance tax and provision for tax

what is the advance tax and what is the provision for tax ? and how to pass the journal entry and how to take under the group in tally
Replies (2)

Dear Uttam Kumar,

Advance Tax - Individuals and HUFs 
for A Y 2016-17 (FY 2015-16)

  • No advance tax is payable if the total tax liability after reducing the tax deducted at source is less than Rs. 10,000/-.
  • Senior citizens ( i.e. resident individuals aged 60 years or above ) who do not have any income from business / profession are exempted from the payment of advance tax w.e.f. 01/04/2012.
  • If Advance Tax is not paid in full for installments falling due on 15th September and 15th December, interest at the rate of 1% on the short amount for 3 months is to be paid u/s 234 C.
  • If Advance Tax is not paid in full for installments falling due on 15th March, interest at the rate of 1% on the short amount for 1 month is to be paid. If you delay payment of the last instalment in March by even a day, you will have to pay interest on the entire instalment amount.
  • If you do not pay advance tax at all or if the aggregate paid by March 31 is less than 90 per cent of the total tax payable, you will have to pay an interest of 1 per cent per month on the deficit amount from April 1 of the following year till the date you file your return u/s 234 B.
  • If tax is paid after due date for filing of return, an interest of 1 per cent per month is payable on the deficit amount from the due date of filing of return till the date of payment of deficit u/s 234 A.

Advance Tax : Non-Individuals 
 A Y 2016-17 (FY 2015-16)

 

  • No advance tax is payable if the total income tax liability after reducing the tax deducted at source is less than Rs. 10000/-.
  • If Advance Tax is not paid in full for installments falling due on 15th June (for Corporates only), 15th September and 15th December, interest at the rate of 1% on the short amount for 3 months is to be payable u/s 234 C.
  • If Advance Tax is not paid in full for installments falling due on 15th March, interest at the rate of 1% on the short amount for 1 month is to be paid. If the payment of the last instalment in March is delayed by even a day, interest is to be paid on the entire instalment amount.
  • If you do not pay advance tax at all or if the aggregate paid by March 31 is less than 90 per cent of the total tax payable, you will have to pay an interest of 1 per cent per month on the deficit amount from April 1 of the following year till the date you file your return u/s 234 B.
  • If tax is paid after due date for filing of return, an interest of 1 per cent per month is payable on the deficit amount from the due date of filing of return till the date of payment of deficit u/s 234 A.

Dear Uttam Kumar,

Provision for tax will be under Current Liabilities and Advance tax will be under head Loan and Advances (Current Assets).

When you pay advance tax entry will be

Advance Tax A/c Dr

   To Cash and Bank 

When Provision for tax is to made entry will be

Profit and loss A/c or Capital A/c ( in case id Individual) Dr

   To Provision for Tax A/c

Hope this will help u...

 

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