Provision for tax
This query is : Resolved
09 March 2009
I want to know what the provision for taxation is and why we make and treatment in accounts?
10 March 2009
10 March 2009
Provision for taxation (here in after called PFT) is a provision made for payment of tax.
A enterprise who liable to pay tax makes a provision at the end of financial on estimated basis.
moreover,as per income tax Act generally (i.e. is estimated tax is more then 5000) the enterprise also pays advance tax during the year.
In the assessment year when total tax payable if certainly known these three amount (a) total tax payable (b) provision made and (c) total advance tax paid till for the year is compared and adjusting entries is passed.
See
For creating provision
profit and loss A/c Dr
To PFT A/c
For payment of Advance tax
Advance tax A/c Dr.
To bank
When tax liability is finally decided
Step 1 PFT till made and tax liability is compared and balance transferred to P/L Appro.
Provision for tax A/c Dr. (PFT till made )
To P/L Appropriation (if tax liability > PFT)
To Income tax payable (total tax liability decided )
To P/L Appropriation (if tax liability advance tax ]
To Advance tax (advance tax till paid)
To Bank(if paid ) /outstanding income tax(is remain outstanding ) ( total tax liability decided < advance tax ]
Step1 and 2 can be merged
Provision for tax is shown as liability under current liability and provision
Advance
Provision for tax will appear as expenses in profit and loss account
For further detail leave query
A enterprise who liable to pay tax makes a provision at the end of financial on estimated basis.
moreover,as per income tax Act generally (i.e. is estimated tax is more then 5000) the enterprise also pays advance tax during the year.
In the assessment year when total tax payable if certainly known these three amount (a) total tax payable (b) provision made and (c) total advance tax paid till for the year is compared and adjusting entries is passed.
See
For creating provision
profit and loss A/c Dr
To PFT A/c
For payment of Advance tax
Advance tax A/c Dr.
To bank
When tax liability is finally decided
Step 1 PFT till made and tax liability is compared and balance transferred to P/L Appro.
Provision for tax A/c Dr. (PFT till made )
To P/L Appropriation (if tax liability > PFT)
To Income tax payable (total tax liability decided )
To P/L Appropriation (if tax liability advance tax ]
To Advance tax (advance tax till paid)
To Bank(if paid ) /outstanding income tax(is remain outstanding ) ( total tax liability decided < advance tax ]
Step1 and 2 can be merged
Provision for tax is shown as liability under current liability and provision
Advance
Provision for tax will appear as expenses in profit and loss account
For further detail leave query
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- SEC 54 OF IT ACT
- Is Aadhar PAN linking required for opening bank account?
- Form 26QB for TDS on property
- Where to show the RCM on Rent paid to unregistered landlord
- CPC Processing IT Return for AY 2023-24 without recognizing the Taxation Option under New Regime
- DTCP approval
- RCM - commercial rent paid to URP under GST
- Payable outstanding for years disallowance
- Partnership Business Can start India (two partners one is Indian and OCI both are wife and Husband)
- Residential status for filling income tax returns in India
- Withholding tax applicabikity for foreign paymenttowqards physio therapy treatment
- Input credit reversal for the FY2023-24
- Regarding Form 15CA & CB
- Issue of gst e invoice
- Interchangeable words in accounts
- Adjusted profit/Loss in the case of LLP and Pvt. Ltd.company
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
Trending Online Classes
-
Excel Mastery Program
CA Rishabh Pugalia
CAclubindia
