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Taxation

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Querist : Anonymous

Querist : Anonymous (Querist)

05 December 2011 How we decide provision for taxation? Please explain the entries and adjustments for advance tax,provision for tax ,Excess provision, and short provision?

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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17 March 2012 Good question. Generally this is not dealt by the auditors.
The provision is made on the basis of income and on the same computation is made for making the provision of tax.
Once the provision is made the entry is P & L a/c Dr. and Provision for I.T Cr )Mention the year of assessment). When you pay advance tax you debit the same.
Till assessment is completed you are not aware what will be payable and refundable so your this entry will remain outstanding.
Once the assessment is made the transfer this entry by debiting Provision for Income Tax and credit the Advance Tax. The excess or short is again debited or credited to the Profit & Loss a/c

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