Adjustment of Provision for Tax, Advance Tax & TDS.

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RAVI RAJORIA (Querist)
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01 June 2010 Question:(Period 2009-2010)
Provision for Taxation : Rs. 30000
Advance Tax: Rs. 25000
TDS: Rs. 2000

Actual Tax liability arises to Rs. 40000.

In this case what will be accounting treatment in the books of account in current year and as well in next year?

CA Ravi Kumar Murugesh

CA Ravi Kumar Murugesh (Expert)
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02 June 2010 So, you have to pay the balance income tax of Rs.13000 for the current year.

For current year you have to pass the below entries:

Income tax Dr : Rs.10000
Provision for tax Dr: Rs.30000
Advance tax Cr : Rs.25000
TDS a/c Cr : Rs.2000
Bank a/c Cr : Rs.13000

There is no necessicity to pass entries in the next year against this unless your tax is finalised for this amount i.e., Rs.40000

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