PROVISION FOR TAX

I not cleared . but provision for income tax is necessary even in the case of refund

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

Agreed with Bijendder Sir

Also replied here

/experts/do-we-have-to-provide-for-tax-471955.asp

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.