Entry for tax in A/c

Page no : 2

CA NEETHU JOY (Executive KPMG) (52 Points)
Replied 28 October 2009

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sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 28 October 2009

neethu joy We have paid advance tax of Rs 150000 and liablity is 275000 and balance rs 125000 is debited to provision and credited to bank account in that he has just added penalty rs 5000 which is arbitrary

CA NEETHU JOY (Executive KPMG) (52 Points)
Replied 28 October 2009

Ok Shivram

I understood...

So after all this, both Advance Tax and Provision for tax will be nil.

Thank U

Abhay (1) (123 Points)
Replied 28 October 2009

Is this entry is correct

I conclude from ur Answer

Prov. for Tax 70000 (L.Y.)

Prov. for tax( Short) 205000

To Adv. Tax 150000

to Bank 125000

and Bal. in Prov. a/c will be tr, to P& L Appropriation a/c at the end of the Year

Thanks to All

Naveen (Accountant) (26 Points)
Replied 28 October 2009

Ritesh Sir ,

Thanks I am Also correcting with your entries.

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Aayush Kumar Agrawal (Chartered Accountants) (66 Points)
Replied 28 October 2009

In the first year entry wud be

Profit & Loss Ac 70000

To Provision for TAx 70000

Advance tax 150000

To Bank 150000

In CAse of settlement

Profit & Loss Account 205000

Provision fot TAx 70000

To Income tax Payable 125000

To Advance TAx 150000

In the year of payment

Income Tax payable 125000

To BAnk 125000

CA RAMESH KUMAR AHUJA (CA, DISA, LLB) (5452 Points)
Replied 29 October 2009

Provisions for Income Tax for current year or earlier years may be adjusted below the line or to Profit and loss Appropriation Account.

srmanas (articled student) (55 Points)
Replied 29 October 2009

As per AS 5 Para 7 & 8, it is an extra ordinary item & it should be adjusted in the year in which it arises. So additional provision of Rs. 2,05,000/- will be created in FY 09-10.

Entry

1. P/L A/c Dr. 2,05,000

To Prov. for Tax 2,05,000

So total povison became Rs. 2,75,000 (including provison created in FY 08-09)

2. Provison for Tax Dr. 2,75,000

To Advance tax 1,50,000

To Bank 1,25,000

3. If any interest or penalty is paid then it will be charged to P/L A/c. But it is not an allowable exp. as per IT Act.

Joydip Chaubey (Article Student-CA Final ) (29 Points)
Replied 29 October 2009

Originally posted by :srmanas
"	As per AS 5 Para 7 & 8, it is an extra ordinary item & it should be adjusted in the year in which it arises. So additional provision of Rs. 2,05,000/- will be created in FY 09-10. Entry 1. P/L A/c Dr. 2,05,000 To Prov. for Tax 2,05,000 So total povison became Rs. 2,75,000 (including provison created in FY 08-09) 2. Provison for Tax Dr. 2,75,000 To Advance tax 1,50,000 To Bank 1,25,000 3. If any interest or penalty is paid then it will be charged to P/L A/c. But it is not an allowable exp. as per IT Act.	"