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Journal entry for advance tax

sayad (Executive) (203 Points)

09 April 2022

what is the journal entry for advance income tax paid and how and what will be the entry for the next year for advance

for eg Mr X paid advance tax for 2022-23 and he deposited in the bank on 3 March 2022 ( 2021-2022)

and what entry to pass if the amount is due for paymnet but not paid in current year and paid in next year

For ex X has to make labour payment of rs 10000 on 31.3.2022 but he dont pay and make and arrangemnet to pay on 15.04.2022 since the paymnet is due for current year but it is made next FY

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15 Replies

prasad Nilugal ( GST Practitioner & Accounts ) (14801 Points)
Replied 09 April 2022

In the F.Y 21-22 you paid Advance Tax , so pass entry on 3/3/022

Advance Tax A/c Dr
Bank A/c Cr
( Payment of Advance Tax )

Advance Tax will be under Advances Asset side
Balance sheet .
You C/F the same advance Tax in the next year as Opening Balance .

Your assessment and Income tax payable is done in the next financial year . After assessment you can adjust tax payable against Advance Tax and pay balance Income Tax .so pass entry .

Income tax payable A/c Dr
To Advance Tax A/c Cr
To Bank A/c Cr
( Income tax paid after adjusted against Advance Tax)
----------------------------------

2) In second query you show as Labour Expenses payable on 31..3.22 . so pass entry
on 31.3.22

Labour Expenses A/c Dr 10000
To Labour Expenses Payable A/c Cr 10000
( Labour expenses payable )

Show Labour Expenses payable , liability side Balance sheet .

C/F same Labour Expenses in the next year as Labour Expenses payable . when you pay labour expenses .
pass entry on 15.4.22

Labour Expenses payable (21-22) A/c Dr
To Bank A/c Cr
( Labour Expenses Paid )

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prasad Nilugal (3914 Points)
Replied 09 April 2022

One more thing forgot and I would like to add in 1 query
you have to make provision for Income tax on 31.3.22 after advance Tax you pass provision entry on 31.3.22.

Income tax. A/c Dr
To Income tax payable A/c Cr
( Provision for Income tax )

Income tax payable A/c under provision , liability side Balance sheet .

sabyasachi mukherjee (27574 Points)
Replied 10 April 2022

Income tax payable. cr you hv shown but dr. income tax account is not there. Income tax payable dr. cr. bank.

prasad Nilugal ( GST Practitioner & Accounts ) (14801 Points)
Replied 10 April 2022

@ Sabyasachi Mukherjee

Above entry is for provision for Income tax , that we make on 31.3.22 . because assessment is done in the next year also we pay income tax in the next year . we make only payment of TDS and Advance Tax in the current year and same is adjusted at time of assessment .
self- assess tax also we pay in the next year . what you have mentioned in query same entry has been passed in the 1st reply .

Eswar Reddy S (CFO- at NHTF) (58270 Points)
Replied 10 April 2022

Advance tax payment will not be accepted after end of the FY.

So you have to pay it through Self Assessment Tax Only

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sabyasachi mukherjee (27574 Points)
Replied 10 April 2022

Statutory liability provisions are generally passed by all companies at year end 31st March 2022.Assesment year /previous year are common terminologies for incometax.

Eswar Reddy S (CFO- at NHTF) (58270 Points)
Replied 10 April 2022

Provision for Taxation can be inserted for total tax before taxes paid . So need not be passed to the extent of due ..

It will be adjusted after ITR is processed

prasad Nilugal ( GST Practitioner & Accounts ) (14801 Points)
Replied 10 April 2022

Last Installment of Advance Tax (100%) was on 15/3/22 please check , so above payment has been done on. 3/3/22 . Also check Advance Tax instalment dates are as follows for F.Y 21-22 .

Advance Tax 15 % 1st instalment on 15/6/21
Advance Tax 45% 2 instalment on 15/9/21
Advance Tax 75% 3 instalment on 15/12/21
Advance Tax 100% 4 instalment on 15/3/22 .