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Short Income tax refund

Gangeshwar (proprietor) (136 Points)

27 May 2020

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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5 Replies

Asha Kanta Sharma (Manager - Finance & Accounts) (10519 Points)
Replied 27 May 2020

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.

CA Aniruddh Barve (Proprietor) (57 Points)
Replied 27 May 2020

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.

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