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Case 1 If TDS is Less than Tax+Cess When TDS Certificate Received TDS Receivable To ABC 4000 4000 At End of Year Tax Exp To Provision For Tax 7800 7800 Provision for Tax To TDS Receivable To income Tax Payable 7800 4000 3800 When Tax Paid Income Tax Payable To Bank 3800 3800 ANNUAL INCOME LESS ANNUAL EXPENSES PROFIT TAX 25% CESS 4% TAX+CESS LESS TDS RECEIVABLE BALANCE TAX Case 1 40000 10000 30000 7500 300 7800 4000 3800 We have to Pay Balance Tax in this Case ANNUAL INCOME LESS ANNUAL EXPENSES PROFIT TAX 25% CESS 4% TAX+CESS LESS TDS RECEIVABLE BALANCE TAX Case 2 40000 30000 10000 2500 100 2600 4000 - 1400 Entries When TDS Certificate Received TDS Receivable To ABC 4000 4000 At End of Year Tax Exp To Provision For Tax 2600 2600 Provision for Tax Income tax Refund To TDS Receivable 2600 1400 4000 When Refund Received Bank To Income Tax Refund 1400 1400 Case 2 Case 2 If TDS is More than Tax+Cess We don’t need to Pay any Tax We get Refund of Bal TDS teachoo.com ANNUAL INCOME LESS ANNUAL EXPENSES PROFIT TAX 25% CESS 4% TAX+CESS LESS TDS RECEIVABLE BALANCE TAX Entries When TDS Certificate Received TDS Receivable To ABC 4000 4000 Income tax Refund To TDS Receivable 4000 4000 At End of Year No Entry for Tax When Refund Received Bank To Income Tax Refund 4000 4000 Case 3 40000 42000 - 2000 0 0 4000 - 4000 0 Case 3 Case 3 If Loss and Tax is 0 We don’t need to Pay any Tax We get full Refund of TDS teachoo.com Case 1 When TDS Certificate Received TDS Receivable To Max 4000 4000 At End of Year Tax Exp To Provision For Tax 7800 7800 Provision for Tax To TDS Receivable To income Tax Payable 7800 4000 3800 When Tax Paid Income Tax Payable To Bank 3800 3800 Case 2 When TDS Certificate Received TDS Receivable To Max 4000 4000 At End of Year Tax Exp To Provision For Tax 2600 2600 Provision for Tax Income tax Refund To TDS Receivable 2600 1400 4000 When Refund Received Bank To Income Tax Refund 1400 1400 Case 3 When TDS Certificate Received TDS Receivable To Max 4000 4000 Income tax Refund To TDS Receivable 4000 4000 At End of Year No Entry for Tax When Refund Received Bank To Income Tax Refund 4000 4000 Summary

About the Author

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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 10 years. He also provides Accounts Tax GST Training in Delhi and Pune.