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Vaibhav Jandey (Life iz Hard; I'm Harder)     24 August 2012

Income tax payment and journal entry ?

Dear Friends,

Today I just stuck up thinking how the entries for Income tax payment are passed in Companies, Partnership Firms etc.

I would like to know the whole solution to this Income tax entry i.e. all the aspects eg TDS, Advance tax and Provision for Income Tax.

Have different angles towards it.

Please share your knowledge whatever you feel right in your views.



 20 Replies

Nitesh Matta

Nitesh Matta (Nothing)     24 August 2012

i also want this to be known. Anyone can help?

(Guest)

for Co. prov on income tax is made where as in case of firm n indl files tef'ed to capital a/c (generally)

2 Like
Sravanthi

Sravanthi (CA Final ICWA Final & M.B.A)     24 August 2012

For Advance Tax:

Advance Tax a/c Dr

   to Bank a/c

Advance Tax - Asset

For TDS:

TDS a/c     Dr

   to party a/c

TDS Asset

3 Like
Sravanthi

Sravanthi (CA Final ICWA Final & M.B.A)     24 August 2012

for Tax Provision

P & L a/c   Dr

  to Provision for Tax a/c

Provision for Tax is a Current Liability & Provisions

for Payment of Tax:

Provision for Tax  a/c     Dr

   to Bank a/c

3 Like
Sravanthi

Sravanthi (CA Final ICWA Final & M.B.A)     24 August 2012

for Finalisaion

1,Tax a/c             Dr

       to Advance Tax a/c

       to TDS a/c

Tax is to booked as an Expenditure

2, P & L a/c       Dr

        to Tax a/c

 

Finally Advance Tax & TDs to be Nil. for Checking Purpose

4 Like
harish .k

harish .k (STUDING)     24 August 2012

the above entries are correct

Vineet

Vineet (Assistant Manager)     24 August 2012

if there is a difference between provision and actual tax paid in that case reversal entry is require(if provision exceed tax)..and if tax part exceed provision in that case nothing needs to be done..please correct if I am wrong..as I am not very sure about it..

R M SHAH

R M SHAH (CA)     25 August 2012

Entries shown by Sravanthi are absolutely correct and Vinnet in case where tax exceeds provision entry for short fall of tax of P.Y. is required to be pass in succedding year.

Ramanuj

Ramanuj (Accountant.)     25 August 2012

the above entry is correct.

Bhaskar Unnikrishnan CPA CMA

Bhaskar Unnikrishnan CPA CMA (Accounts / Administration)     26 August 2012

Good Explanation Sravanthi...
Rajesh

Rajesh (CA Final Student)     27 August 2012

Hi,Vineet

If Tax provision exceeds to Tax paid(Adv tax, TDS) you need to pay in that year by Debiting Tax A/c  Crediting Bank/Cash A/c.

If Tax provision is less than Tax paid(Adv.tax,TDS) you have to claim for refund.

Vaibhav Jandey

Vaibhav Jandey (Life iz Hard; I'm Harder)     27 August 2012

Originally posted by : Sravanthi

For Advance Tax:

Advance Tax a/c Dr

   to Bank a/c

Advance Tax - Asset

For TDS:

TDS a/c     Dr

   to party a/c

TDS Asset

thank you my friend for replying,

Like the above explanation could you please tell me the cases where i t provision exceeds tax paid and vice versa. What are the adj that needs to be carried out. Please show entry wise if possible; would be great if you can cite the principles applied.

AASAN HAI

AASAN HAI (STUDENT)     28 August 2012

WAT WOULD BE D ENTRY IF PROVISON FOR TAX SHORTFALLS IN COMPARISON 2 ACTUAL TAX PAID

Ram Chandra

Ram Chandra (Finance Officer)     30 August 2012

When Individual, firm and company pay advance tax

       Advance Tax A/c Dr.      *****

            To Bank A/c   Cr.      *****

When TDS deducted by other parties

         Advance Tax (TDS) A/c Dr.   ****

             To Party Name (Who deducted TDS) Cr.  *****

When Tax deposite under section 140(a) as self assessment 

          Income Tax (for respective assessment year) A/c Dr.  *******

                  To Bank (if there is any payable) A/c Cr.                  *****

                  To Advance Tax A/c Cr.                                                *****

these are sufficent enties if we want some thing special than we make some more entry for due to respective entry


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