Provision for it

This query is : Resolved

Mohammed Shahid Rahman (Querist)
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30 November 2017 Hello
In our Balance Sheet (Partnership Firm) for year ending 16-17, we mentioned Provision for Income Tax 16-17 as : 10,833.86,
and advance tax paid was 22,000/-.

IT return was submitted first week of August 17 after paying self assessment of 14440/-

Now I am doing entry in tally today, how will I do the above entries? I got the order last week with a refund of Rs.3/- They have charged interest of 686/-

Please help.
Thanks

Vivek Hebbar

Vivek Hebbar (Expert)
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05 December 2017 Hi. I would first like to mention here that if the accounts have been finalised with the figures of Rs.10,833 as provision for tax and Rs.22,000 as advance tax and you have paid SA tax of Rs.14,440, then the accounts are erroneous because while making provision for income tax, the computation is supposed to be made and the provision would have been Rs.36,500 (approx.).
Now considerin that the error has occured and the returns filed, all the entries need to be passed in the current year FY17-18.
First entry will be for payment of SA tax Rs. 14,440 which would be debiting "SA Tax 16-17 A/c" and crediting "Bank A/c".
Second would be passing additional provision entry by debiting "Provision for tax 16-17 (P&L) A/c" and "Provision for tax 16-17 (B/s) A/c" for Rs.25,606.14 (Rs.36,440-10833.86).
Third entry would be setting off all accounts relating to FY16-17.

Mohammed Shahid Rahman

Mohammed Shahid Rahman (Querist)
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08 December 2017 Thank you so much Mr.Vivek, you have been a life saver.
Actually I did calculated the provision myself. I do not know how to do it but some one said that it should be 30% of net profit, hence the mistake. My firm consist of only 3 people so I have not hired any accountant and do it myself.
Thank you so much once again.
Regards
Shahid

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Mohammed Shahid Rahman

Mohammed Shahid Rahman (Querist)
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08 December 2017 Hello Mr.Vivek,
I forgot to mention that I made one more blunder in last year's balance sheet.
As of March 2017 I had 14078 carry forward in my VAT, however, by mistake in the balance sheet I mentioned only Rs.246/-
How can we correct this entry in tally in the year 17-18.
Pls help.

Vivek Hebbar

Vivek Hebbar (Expert)
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09 January 2018 Same like Income Tax, you can pass entry for the differential amount of VAT carried forward. I assume that it is the input credit carried forward. Based on this assumption, you can pass an entry debiting "Input VAT A/c" which would be balance sheet item. The credit has to be hit to the respective account based on the returns filed.