Dear All,
Please suggest how to account for the difference when the amount refunded by the department is less than the amount refundable as per return filed.
Under which head of expenses, the difference be booked.
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Short Income tax refund
Replies (5)
Quick Summary
If you had created IT Refund Receivable Ledger earlier, you can not credit the same to the extent IT Refund Received and Debit Bank Account. However it is better to check the intimation notice by IT Department showing both calculations from your end and as per IT Depart to have a better understanding as to why there is difference. If it due to some mistake from your end it is better to make rectifications entries in the books of accounts. Otherwise if the IT Refund claimed is valid you can raise a dispute on the same with IT Department.
When you are filing ITR and claiming refund, you basically have an asset in your books "Tax receivable" or "TDS receivable". Say the amount was 1lac
So the entries you need to pass will be
1. For refund amount received Rs 60,000
Bank a/c ....Dr 60,000
To TDS receivable 60,000
2. For the amount of refund not received and is undisputed
Income tax expense a/c Dr 40,000
To TDS receivables 40,000
This will be shown under income tax expense in P&L.
Income tax expense is allowed only in books of accounts, and not for tax purpose.
Check tax credit mismatch.
thnxs a ton.....i was not able to think of appropriate account....now i will debit income tax expense.
Please hit thumbs up in case my reponse has helped you.
Thanks
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