INCOME TAX PROVISION

Income Tax paid                  Dr

To Cash

being advance tax paid

Provision for Income tax

to Bank a/c

First entry will be

Expenses   1000

To Vendor              800

To TDS provision  200

(being Provision created for TDS payable)

TDS  200

To bank  200

(While making the payment)

The provision must be provided as per the method of accounting policy adopted if you want to provoide provision then take it into P & L A/c. & Balance Sheet.

Advance tax A/c.                                                           Dr.

Tax Deducted at Source A/c.                                       Dr.

Self Assessment Tax A/c.                                         Dr.

                 To Provision for Income Tax                

                     Provision for income tax can show in the P & L A/c. but the tax amount to be calculated on before taking provision for tax into account

In case of proprietorship firm, the return is filed in the name of proprietor instead of firm, aal the taxes are claimed in his personal name, so it is better to transfer all these taxes to his capital account.