09-08-2010, 05:17 PM
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by olympia</i>
<br />difference b/w Advance Tax and Provison for taxation.....
Advance tax would be prepaid taxes, or overpaid taxes left with the taxing body. It is an asset account, a deferred credit.
Provision for taxes would be an estimate of tax liability for the period covered by the financial statements. It is a liability account.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Advance Tax is the tax which you pay in advance and it is adjustable against your income tax liability. there are two types of advance tax in pakistan-
1- The tax deducted at source
2- Advance tax paid quarterly u/s 147 of the Income Tax Ordinance.
the entry for the advance tax will be made as soon as advance tax is deducted or paid. Its entries will be as follows-
Advance tax Deducted by Parties
Advance Tax Dr.
Parties Receivabke Balance Cr.
Advance Tax Paid on Utilities
Advance Tax Dr.
Cash / Bank Cr.
Advance tax Paid u/s 147
Advance Tax Dr.
cash / bank Cr.
The provission for taxation is the provision which you create in your accounts. it is the estimated income tax libility of the company based on Profits or Turnover. Normally this figure should be the same as appears in your Income Tax Return. For Example if you are preparing accounts for the year ended 30/06/2010 then the Income Tax return of company will be filed after finalisattion of accounts and last date for filing of return is 31/12/2010.
Now you finalise your accounts and determines the Profit Before Tax and then make adjustments according to tax laws to determine taxable income/ (loss)on which income tax is paid. this is the amount of tax provision for the year. Normally this is the same as appears in your income tax return but it can differ.
<br />difference b/w Advance Tax and Provison for taxation.....
Advance tax would be prepaid taxes, or overpaid taxes left with the taxing body. It is an asset account, a deferred credit.
Provision for taxes would be an estimate of tax liability for the period covered by the financial statements. It is a liability account.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Advance Tax is the tax which you pay in advance and it is adjustable against your income tax liability. there are two types of advance tax in pakistan-
1- The tax deducted at source
2- Advance tax paid quarterly u/s 147 of the Income Tax Ordinance.
the entry for the advance tax will be made as soon as advance tax is deducted or paid. Its entries will be as follows-
Advance tax Deducted by Parties
Advance Tax Dr.
Parties Receivabke Balance Cr.
Advance Tax Paid on Utilities
Advance Tax Dr.
Cash / Bank Cr.
Advance tax Paid u/s 147
Advance Tax Dr.
cash / bank Cr.
The provission for taxation is the provision which you create in your accounts. it is the estimated income tax libility of the company based on Profits or Turnover. Normally this figure should be the same as appears in your Income Tax Return. For Example if you are preparing accounts for the year ended 30/06/2010 then the Income Tax return of company will be filed after finalisattion of accounts and last date for filing of return is 31/12/2010.
Now you finalise your accounts and determines the Profit Before Tax and then make adjustments according to tax laws to determine taxable income/ (loss)on which income tax is paid. this is the amount of tax provision for the year. Normally this is the same as appears in your income tax return but it can differ.
