Dear experts
We have made the provision in books of account
Profit & Loss account Dr.
Provision for income tax Cr.
I have to sumbit one copy of balance sheet in Bank so kindly asvise how to show provision value 29000 in profit and loss account
Net Profit 731000 after provision 702000
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Income tax provision in books
Replies (10)
It’s debit
Current tax a/c income statement
To Tax Provision a/c liabilities
in nominal account debit reduces value and pbt is reduced by your current tax amount.
Income tax a/c dr
to Provision for income tax a/c
Provision for income tax a/c dr
to Bank a/c
Profit and loss account dr
to Income tax a/c
to Provision for income tax a/c
Provision for income tax a/c dr
to Bank a/c
Profit and loss account dr
to Income tax a/c
The above two entries are ok, why the third one?
Income Tax should be transferred to profit and loss as it is and expense
Nice Your doing ledger entries, while I understood it as final accounts entries. Sry for the confusion
Ok got it. You debited the current tax liability to create a provision in the first entry.
Yes you're right
Sir. so that means income tax is expense.
in tally we need to create the ledger under indirect exp
in tally we need to create the ledger under indirect exp
Yes. Tax and provision are different ledgers. Direct and indirect: While direct taxes are imposed on income and profits, indirect taxes are levied on goods and services. from this we can understand you need to have tax ledger for relevant taxes.
Agree with yasaswi
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