10 April 2008
First let me apologize for wrong area of posting, because am not sure whether it should be posted in this section or in accounting section....
One of my client paid sales tax for the year 2005-2006 in 2007-2008... how do i account the same...
he paid entire tax as on that date... but when assessment was finished, it found that there was of shortage of Rs 3000/- to be payable... a)how do i pass an entry... for that.... b)in case of refundable how do i account the same c)if it is income tax does your answer differ
11 April 2008
If the sales tax is inrespect of the sales made while accounting for sales, if your client had accounted the liability for sales tax in salestax payable account, then the sales tax now paid will be debited to that account. On the other hand if he had taken the entire amount of invoice including the sales tax to the slaes account (it is an incorrect procedure)then he has to debit the sales tax now paid as an expenditure in the Sales tax account.
Now, for the shortage amount if it is more than the payable account, will be debited to the expenditure account.
If it is receivable, then create areceivable acount debiting it with the amount receivable crediting sales tax expenses account.
In the case of income tax, it is a charge to the profit and loss account as an appropriation of profit.
CAclubindia
