I have a query regarding provision for current year tax, advance tax and TDS Receivable about it disclosure in revised schedule VI format. As Current years tax is a current liability and Advance tax net of provision for tax is refund which is also to be treated as Current Assets . But while going through Reliance Annual Report they have made the disclosure as long term term Loans & Advances. And in case of TCS Annual Report , they have disclosed Advance tax(including refund receivable) as Long term Loan & Advances and Current Income Tax as Short term Provision......So can you brief us about the above said issue and how to give the correct treatment.
29 June 2012
Yes the correct treatment as per new classifications in Sch VI is to show the current years' liability under Current Liabilities (since it has to be paid before filing IT return). Any advance taxes as per books after netting off provisions for respective years should be shown under Long-term Loans and Advances (unless Refund Orders have been passed) since they are not likely to be refunded in the short-term.