INCOME TAX PROVISION PREVIOUS YEAR

Hi Kunal,

If you didn’t make provisional income tax entries during FY 2022-23, here’s how you can adjust the advance tax, TDS, TCS, and income tax paid while preparing your books or accounts now:

1. Advance Income Tax & TDS/TCS Credit:

• Advance tax, TDS, and TCS are treated as prepaid assets (or current assets) until the final tax liability is computed.

• When you file your income tax return (ITR) and compute the final tax liability, these amounts are adjusted against your total tax liability.

2. Accounting Treatment in FY 2023-24 (when final tax liability is determined):

• At the time of payment or receipt of TDS/TCS certificates:

  • Debit: Advance Tax/ TDS Receivable / TCS Receivable (Asset)

  • Credit: Bank or Tax Deducted Source (depends on mode)

• At the time of recognizing income tax expense (based on tax computation):

  • Calculate the total tax liability for FY 2022-23 (including interest, if any).

  • Debit: Income Tax Expense (P&L)

  • Credit: Income Tax Payable (Liability)

• At the time of adjusting prepaid tax:

  • Debit: Income Tax Payable (Liability)

  • Credit: Advance Tax/TDS/TCS Receivable (Asset)

• Any balance remaining in prepaid tax (Advance Tax/TDS/TCS) after adjusting the final liability can be shown as Income Tax Refund Receivable.

3. If tax is already paid but no entry is made:

• You may pass the following journal entry now:

  • Debit: Advance Tax / TDS Receivable (Asset)

  • Credit: Bank

• Later, when tax expense is computed, adjust as above.

Summary:

If the FY 2022–23 accounts are still open, record the tax credits and payments against the income-tax provision/current-tax balance, then reconcile them with the tax computation and Form 26AS/AIS. Advance tax and self-assessment tax paid are tax payments; TDS/TCS are tax credits—not expenses. If no tax provision was recorded, book the current-tax expense and the related tax assets/liabilities in the appropriate accounts, with the net balance reflecting tax payable or refundable.

If the accounts are already finalised, do not simply post a backdated entry: assess whether the omission is material and correct it under the applicable accounting framework and your firm’s closing process. The exact adjustment depends on whether FY 2022–23 books are open, whether tax expense was otherwise recognised, and how the payments/credits were previously posted.

Reconciling these balances is part of the year-end tax-close workflow, tying ledger balances to the return and tax-credit records. Manual practice work is difficult, and automation reduces repetitive reconciliation while professional judgment remains in control. At Jir AI, our 2,000+ AI agents and 650+ integrations streamline GST, ITR, TDS, TCS and other compliance workflows, helping reduce manual workload by up to 70%. For a walkthrough tailored to your workflow, message us on WhatsApp: https://wa.me/message/3HVOZ7HIY4ESC1