Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

Queries related to advance tax, provision for income tax, Income tax refund due and tds

08 April 2021

Hello experts

My question is

If I have paid advance tax more than the actual tax calculated on profit then what is the accounting treatment of this and the income tax refund due.

And if there is tds opening debit balance then what accounting treatment should be done of that balance?

Please reply as soon as possible

Thanking you

Reply
Follow
Share

10 Replies

CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 08 April 2021

On Refund Received,

Bank a/c dr
to Income Tax refund a/c

TDS should be shown under current assets by showing the opening balance

1 Like

Upgrade to CAclubindia Pro. Subscribe Now!

prasad Nilugal (3914 Points)
Replied 08 April 2021

Advance Tax payment

Advance Tax A/c Dr

To Bank A/c Cr

( Advance Tax paid )

Assessment of Income Tax will be next year , On 31 march you have pass entry

Income Tax A/c Dr

To Income Tax payable Cr

( Provision for Income Tax )

Next year on Assessment adjustment entry

Income Tax payable for F.Y A/c Dr

Income Tax refund A/c Dr

To Advance Tax A/c Cr

To TDS payable A/c Cr

( Tax Payable adjusted against Advance tax paid and TDS deducted and balance refund )

Balance Refund Entry

Bank A/c Dr

To Income Tax refund A/c Cr

( refund received received )

Note - Dr balance TDS means deducted by party will be adjusted at time of assessment , So paid Advance Tax and TDS deducted more than Tax payable , hence refund .

3 Like

Danish Abbas (153 Points)
Replied 08 April 2021

I have paid advance tax but no provision has been made till now and there is refund also and tds current year and opening debit balance also now how to adjust it so that my my opening balance could be corrected

1 Like

prasad Nilugal (3914 Points)
Replied 08 April 2021

Your TDS deducted by party , showing Dr balance will be closing balance this year and at time of assessment next year will be adjusted , check my 3rd entry . you have make provision entry also.

1 Like

Danish Abbas (153 Points)
Replied 08 April 2021

Can you give me your contact no. to solve my query

1 Like

Upgrade to CAclubindia Pro. Subscribe Now!

prasad Nilugal (3914 Points)
Replied 09 April 2021

When I try to send you mobile number , showing error massage , your reply contain mobile number , so probably I will not be able to send you my number . check out can you send your your mobile number to me .

Danish Abbas (153 Points)
Replied 09 April 2021

U can send me your contact number by private message

prasad Nilugal (3914 Points)
Replied 09 April 2021

I do not how send private massage .

CMA Poornima Madhava (CMA) (13112 Points)
Replied 09 April 2021

Originally posted by : Danish Abbas
	I have paid advance tax but no provision has been made till now and there is refund also and tds current year and opening debit balance also now how to adjust it so that my my opening balance could be corrected

Even if no provision has been made for income tax during the PY, you may make the entries, as suggested by Prasad, during the current year. Just ensure to match the balances as per financials.

IN Substance (2 Points)
Replied 09 April 2021

Wait for Final Assessment Order. For actual tax liability pass accounting entry :- income tax exp a/c Dr. to Provision for tax. On final assessment adjust provision for tax against Advance tax and balancing amount will go to P&L as excess or short tax paid.