Saturday, April 29, 2017

advance tax payment entry


Eg: Vasu & Co Total Income Tax Payment Amount is Rs. 12,000 for F.Y: 2016-17, then Advance Tax is paid Rs.10,000 on 15.03.2017 through Axis Bank and balance Rs.2,000 paid on 01.06.2017 through Axis Bank.
 

Accounting Entries for the above example
 
Accounting Entry 1: At the time of Advance Tax Payment
Dt: 15.03.2017
Dr. Advance Tax Paid F.Y: 2016-17 ----- Rs.10,000  
Cr. Axis Bank ------------------------------ Rs.10,000

Note:  
  1. Advance Tax Paid F.Y: 2016-17 Head is Indirect Expenses

Accounting Entry 2: At year ending create Provision of Income Tax.
Dt: 31.03.2017
Dr. Income Tax Payable F.Y: 2016-17 ----------- Rs.2,000
Cr. Provision for Income Tax F.Y: 2016-17 ----- Rs. 2,000

Note:  
  1. Income Tax Payable F.Y: 2016-17 Head is Indirect Expenses
  2.  Provision for Income Tax F.Y: 2016-17  Head is Provision
Accounting Entry 3: When Final Tax Paid
Dt: 01.06.2017
Dr. Provision for Income Tax F.Y: 2016-17 ------- Rs.2,000
Cr. Axis Bank ---------------------------------------- Rs.2,000

Finally the above transaction (or entry) is effected in your books for F.Y: 2006-17 as follows:

Total Rs.12,000 booked as Expenditure [Rs.10,000 paid & Rs.2,000 as Current Liability]

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