Income Tax Provision: How to Record in Accounts

Income tax provision

Naveen Kumar

461 Points Posted on 07 January 2021

Sir,

please provide the entry in books of account how to make the entry provision for income tax

Replies (4)

Quick Summary

This discussion explains how to make the accounting entry for a provision for income tax. It details the journal entry required on 31st March, classifying it as a current liability on the balance sheet. It also covers the subsequent entry when the tax is paid and how to handle any short or excess provisions by adjusting the Profit and Loss account.

CA. Sourav Sarkar

Chartered Accountant

16188 Points Posted on 07 January 2021

Provision for income tax is current liabilities

prasad Nilugal

2353 Points Posted on 07 January 2021

On 31st march you make entry as follows

Income Tax A/c Dr
To Income Tax payable A/c Cr
( Being provision for Income Tax made )

Income tax payable A/c under head Provisions libility side Balance sheet .

Next year after assessment when you pay tax
entry will be

Income tax payable A/c Dr
To Bank A/v Cr
( Income tax for Last F.Y deposited )