5 Replies
CA Navin Jain
(MANAGER (FINANCE & ACCOUNTS))
(11768 Points)
Replied 30 August 2010
I not cleared . but provision for income tax is necessary even in the case of refund
CA. BIJENDER KR. BANSAL
(ACA, B.COM)
(8148 Points)
Replied 30 August 2010
YES, YOU HAVE TO MAKE PROVISION FOR TAX BY AMOUNT OF YOUR TAX LIABLITY BEFORE ADJUSTMENT WITH TDS.
THERE IS TWO WAY TO PASS ADJSUTEMENT ENTRY
1. AT THE TIME OF FILING OF RETURN I.E ON DATE OF FILING OF RETURN, ADJUSTED PROVISON FOR TAX WITH ADVANCE TAX & TDS, CACULATE TAX PAYABLE AS SELF ASSESSMENT OR TAX REFUNDABLE. LIKE BELOW
PROVISION FOR TAX FOR AY 2010-11 DR 10000 ASSUMED
TO REFUND OF INCOME TAX DR 10000 SHOWN AS CURRENT ASSET
TO ADVANCE TAX & TDS AY 2010-11 CR 20000
2. BALANCE OF PROVISON FOR TAX & ADVANCE TAX IS C/F TILL THAT YEAR IN WHICH ASSESSMENT IS MADE.
WHEN ASSESSMENT IS DONE THEN ENTRY IS PASSED
PROVISON FOR INCOME TAX DR 10000
BANK A/C DR 12000
TO ADVANCE TAX & TDS CR. 20000
TO INTERST ON REFUND CR 2000
sagar
(CA Final)
(379 Points)
Replied 30 August 2010
Darshan, your question is whether provision for income tax in books of accounts is required even if you have tds certificates supporting the calculated refund.
Yes, you will have to make provision . this is because, when you record tds certificates, you show them as assets.
when u will get refund you will have to genuinly show them against this asset.
Making Income tax provision is mandatory as per guidance note and accounting standard also suggests so.
As per schedule v of companies act, you will have to show separately in profit and loss account, any provision for income tax and provision for deferred tax.
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