Payment of income tax notice

Dr. Taxes/Income Tax paid

Cr. Bank (or Cash)

Narration: IT Demand for Ass. Yr. 20xx-xx

AGREE WITH RAMBHIA SIR

As per finalized balance sheet this amount was not in our liability or provisions. but notice received us next year so may be it our extra Expenditure.

Please suggest amount will effect against capital account/indirect Expenses/profit & loss account.

For any Business entity It can be taken indirect expense, if its regular tax liability, but if its any sort of penalty or interest payment, debit it to capital account.