How to record the tax related transactions in the book of accounts? explain with examples?
hi josejen, this is a wonderful question that need deep knowledge in tax and accounting. First u need to know that there are 2 kinds of accounting one cash system and other accruel system. In cash system matter is simple. just debit the tax you paid and credit the cash/ bank as and when you paid it. Please note that you cannot claim a deduction on this behalf from income tax.
Now when you are following accruel system you have two options. One just acount the calculated tax as a liability, hence debit income tax and credit income tax payable. deibit the liability a/c and credit bank/ cash when you are payig it.
But if you are followin accounting standards to account tax matter is too complicate. you need to calculate what is a .......if you want know more ...please contact me |
