I enrolled for porfessional tax recently and had to pay the previous 2 years dues. What will be the journal entry for the arrears paid? No liability was shown in the previous perid
Journal entry for professional tax
Replies (5)
Quick Summary
due entry will be
pt a/c. Dr
to PT payable A/c
payment entry will be
PT payable
to bank
pt a/c. Dr
to PT payable A/c
payment entry will be
PT payable
to bank
Exactly precise.
what is the meaning of professional tax credit mean
Under which head will PT A/C and PT Payable A/C come under?
Entries for arrears (late enrolment):
• Recognise the arrears: Dr "Professional Tax – Prior Period" (or Rates & Taxes, with a prior-period disclosure if material under AS 5 / Ind AS 8), Cr PT Payable.
• Payment: Dr PT Payable, Cr Bank. Show interest or penalty for late enrolment separately (Dr Interest on PT / Penalty, Cr PT Payable).
• Tax deduction:
– For a business (PTEC on the proprietor, firm or company): deductible under Sec 43B in the year of actual payment, regardless of the period it relates to. Arrears paid now are deductible this year.
– PT deducted from employees' salaries (PTRC) is the employees' tax. The employer only holds and remits it. Employees claim it under Sec 16(iii).
• Interest on PT is compensatory and generally deductible. Penalty is disallowed under Explanation 1 to Sec 37(1).
• "PT credit" usually means the PT paid by an employee shown in Form 16, deductible from salary.
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