Provision for it

the interest charged is to be shown as an expense and the refund or payment in excess of the provision, advance tax and self assessment tax is to be added or reduced from the P/L considering tax related to prior years.

Thanks for the reply Nis.

An entry with dr and cr wud be very helpful. I hv joined office and learning things.

Is it correct?
Refund - Indirect income
Interest - Indirect income

Hi Nisha

Thanks for the reply.

So IT refund will come which head?

Secondly provision for IT was say for example 10000 but after computation it was 14000 so what be the entry for this excess 4000 and which head it will come?

u need not create any head for Income Tax Refund. The provision for I.Tax, Advance Tax, TDS for relevant year,, these aal shall be set off against each other,, and the excess or shortage if any shall be treated. this excess or shortage is tax related to prior years which may be created under indirect expenses head. from the presentation point of view,, treat it after charging current tax, defferd tax, MAT credit, if any.

Thanks for the help Nisha. I really appreciate it.

Regards

1. Profit and loss A/c             Dr. 24,917.14

        To Provision for tax                                24,917.14

2. Provision for tax a/c          Dr. 35,751

       To Tax liability a/c                                   35,751

3. Tax Liability a/c                 Dr. 22,000

        To Advance Tax A/c                               22,000

4. Tax Liability a/c                 Dr. 13,751

     Interest on IT                    Dr.     686

     IT refund (A.Y 2017-18)   Dr.         3

          To Bank A/c                                         14,440

5. Bank A/c                          Dr.          3

          To IT refund (A.Y 2017-18)                          3

Hello Satish

Thank you so much for the wonderful reply. 

I really appreciate your help in this concern, however,
as I have less knowledge of accountancy and I am still learning it, i need to know 
whether I have understood your answer or not. Below I have
mentioned the heads under which these ledgers will go in Tally:

Provision for tax - Indirect Expenses
Provision for Tax a/c - Provisions
Tax Liability - Duties & Taxes
Advance tax A/c - Loands & Advances (Asset)
Interest on IT - Indirect Expenses
IT Refund (AY 2017-18) - Capital

I have not receievd the refund yet. SO i gues wil put 
it under asset, so the last entry would be:

Refund Receivable  Dr.          3           
To IT refund (A.Y 2017-18)            3

Pls suggest.

I have one more query which I will post one this one is thru.

Every thing is ok. but Prov. for Taxation  -   Provisions

If IT Refund Not received please ignore entry no 5.

Thank yo so much for the help Satish.

You have been very helpful.

I have one more query which I will post soon.

Regards

Hello Satish Ji and other members

In the FY 15-16 I outsourced my accounting and got y Balance Sheet, Profit & Loss statement. As I was very late on submitting the ITR, I did not check it. Based on FY15-16 I prepared FY16-17 and submitted that too.

Yesterday I was going through books and found that the person prepared wrong Outstanding data in the FY15-16.

This is what he showed:

This is what should have been shown:

Major area of difference is Arrear Rent, O/S Wages and the guy totally forgot to mention O/S Subscripttion.

Now that I have time in FY17-18, can it be rectified by prior period outstanding or something like that? How can it be done?

Please help me guys.

Thanks and regards
Shahid

yes, you can pass the adjustment entries.

but these items to be shown separately in the financial statements (profit and loss a/c) as prior period items.

if it is additional expenditure entry is

Profit and loss adjustment a/c      dr.

      To O/s Exp a/c

Hello Satishji

Thanks so much for the reply. 

However an example with arrear rent will be helpful. I have made balance sheet and profit and loss afresh for the year 15-16.

I guess follwing would be the entries which I need to do in FY17-18:

pnl adjustment a/c dr 4200dr
O/s Subscripttion 4200 cr

------------------------------------

pnl adjustment a/c dr 13132 dr
Arrear Rent 13132 cr

----------------------------
pnl adjustment a/c dr 243
o/s wages 243 cr

-------------------------------------

I have created O/S ledgers under head of current liabilities but I dont know under which head shd i put proft and loss in Tally.

Please note that I have cleared all the o/s in the year 2017-18.

Thanks and regards

Shahid

Outstanding expenditure account under the head of current liabilities