journal entry for self assessment tax

This query is : Resolved

sonal (Querist)
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04 May 2010 i want to pass entries for payment of self assessment tax. i have debited advance tax and tds receivable in current assets.
now, while paying self asseesment tax, what entry i am supposed to pass and when i receive the assessment order from the itax dept. after a year or two, then what entry i am supposed to pass if the amount as assessed by the department is different from the amount paid as income tax by the company.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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04 May 2010 FOR SAT:

SELF ASSESSMENT TAX A/C DR
TO BANK A/C
KEEP SAT UNDER CURRENT ASSETS.

ON RECEIVING ORDER:--

PROVISION FOR TAXATION A/C DR.
TO TDS RECEIVABLE A/C
TO ADVANCE TAX A/C
TO SELF ASSESSMENT TAX A/C

ANY DIFFERENCE SHOULD BE ADJUSTED WITH WITH PROFIT A BY PROVIDING AGAINST SHORT PROVISION OR WRITING OFF EXCESS PROVISION.

CA. Prashanth Kumar Jain

CA. Prashanth Kumar Jain (Expert)
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04 May 2010 Correct entry should be

Current Tax/ Provision for tax A/c DR.
To
Bank/cash A/c

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sonal

sonal (Querist)
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04 May 2010 Will the entries be any different if the firm is a sole proprietorship firm? Am i suppose to book income tax expenditure in the books or shall i pay through capital account?

Aditya Maheshwari

Aditya Maheshwari (Expert)
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04 May 2010 You should pay through capital a/c as income tax expense as it is not allowed. So in effect it is passed to the capital a/c only in case of sole proprietoship firm.

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sonal

sonal (Querist)
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05 May 2010 Thank you all!!