Advance Tax Accounting Entries | Company & Non-Company Assessee

Advance Tax Due Dates for FY 2025-26 (AY 2026-27) 

15th June 2025	At least 15% of total tax liability.
15th September 2025	At least 45% of total tax liability.
15th December 2025	At least 75% of total tax liability.
15th March 2026	100% of total tax liability.

Sandeep Co Ltd suggests that his estimated taxable income for the current year will be Rs. 11,00,000. Based on the assumption that no income deductions were claimed the taxes to be paid will be Rs. 1,12,500.

1. Paid before or on 15th June 1,12,500 x 15% = 16,875 as advance tax 
2. Paid before or on 15th September 1,12,500 x 45% = 50625, differential = 50625 – 16875 = Rs 33750 as advance tax.
3. Paid before or 15th December 1,12,500 x 75% = 84375, differential = 84375 – 50625 = 33,750 as advance tax
4. Paid before or on 15th march differential = 1,12,500 – 84375 = 28125 as advance tax.

For further in depth of advance tax please visit my earlier post.

Before making journal entries we have to make ledger 

• Advance Tax under Current Assets 
• State bank of India under Bank

Date	Particulars	L.F	Amount	Amount
15.06.2025	Advance Tax A/c		16,875
	To State bank of India A/c			16,875
	(being advance tax deposited)
15.09.2025	Advance Tax A/c		33,750
	To State bank of India A/c			33,750
	(being advance tax deposited)
15.12.2025	Advance Tax A/c		33,750
	To State bank of India A/c			33,750
	(being advance tax deposited)
15.03.2026	Advance Tax A/c		28,125
	To State bank of India A/c			28,125
	(being advance tax deposited)

Advance Tax Deposited = 16,875+33,750+33,750+28,125 = Rs.1,12,500.

In case of Company Assessee

Where the assessee is a company, the amount of tax deducted at source (TDS) is finally adjusted against the company’s total tax liability at the time of filing its income tax return. Such TDS is treated as an advance tax paid on behalf of the company and is credited in Form 26AS. Any excess TDS after final assessment becomes refundable, whereas a shortfall is payable by the company as self-assessment tax.

Case 1: Tax Payable Situation

Let’s assume tax amount 

• Tax Payable = 7,00,000
• TDS Receivable = 5,00,000
• Advance Tax Deposited upto 15th December 1,12,500

7,00,000 – (5,00,000 + 1,12,500) = Tax payable amount 87,500

Before making journal entries we have to make ledger 

• Advance Tax under Current Assets 
• TDS Receivable under Current Assets
• State bank of India under Bank
• Tax Expense under Expense
• Provision for Tax under Current Liabilities 
• Income Tax Due A/c under Current Liabilities

Date	Particulars	L.F	Amount	Amount
15.03.2026	Tax Expense A/c		7,00,000
	To Provision for Tax A/c			7,00,000
	(Being Tax Due)
15.03.2026	Provision for Tax A/c		7,00,000
	To TDS Receivable A/c			5,00,000
	To Advance Tax A/c			1,12,500
	To Income Tax Due A/c			87,500
	(Being TDS payable)
15.03.2026	Income Tax Due A/c		87,500
	To State bank of India			87,500
	(Being TDS deposited)

Case 2: Refund Situation

Let’s assume tax amount 

• Tax Payable = 7,00,000
• TDS Receivable = 6,00,000
• Advance Tax Deposited upto 15th December 1,12,500

Before making journal entries we have to make ledger 

• Advance Tax under Current Assets 
• State bank of India under Bank
• Tax Expense under Expense
• Provision for Tax under Current Liabilities 
• Income Tax Refund Due A/c under Current Assets
• TDS Receivable under Current Assets

Date	Particulars	L.F	Amount	Amount
15.03.2026	Tax Expense A/c		7,00,000
	To Provision for Tax A/c			7,00,000
	(Being Tax Due)
15.03.2026	Provision for Tax A/c		7,00,000
	Income Tax refund due A/c		12,500
	To TDS Receivable A/c			6,00,000
	To Advance Tax A/c			1,12,500
	(Being TDS refund)
17.05.2026	State bank of India A/c		12,500
	To Income Tax refund due A/c			12,500
	(Being Tax amount received)

Case 3: Only Refund (No Tax Liability)

Let’s assume tax amount 

• Tax Payable = 0
• TDS Receivable = 50,000

Before making journal entries we have to make ledger 

• State bank of India under Bank
• Income Tax Refund Due A/c under Current Assets
• TDS Receivable under Current Assets

Date	Particulars	L.F	Amount	Amount
15.03.2026	Income Tax refund due A/c		50,000
	To TDS Receivable A/c			50,000
	(Being TDS refund entry)
17.05.2026	State bank of India A/c		50,000
	To Income Tax refund due A/c			50,000
	(Being Tax amount received)

In case of Non-Company Assessee

For non-companies like individuals, HUFs, or firms, the tax deducted at source (TDS) is used to offset their total tax bill when they file their income tax return. The TDS amount, which shows up on Form 26AS, is viewed as tax they’ve already paid. If the TDS is more than what they owe, they'll get a refund. But if it's not enough to cover their tax liability, they have to pay the remaining balance as self-assessment tax.

Case 1: Tax Payable 

Let’s assume tax amount 

• Drawing = 7,00,000
• TDS Receivable = 5,00,000

Before making journal entries we have to make ledger 

• Drawing under Capital 
• State bank of India under Bank
• Income Tax Due A/c under Current Liabilities

Date	Particulars	L.F	Amount	Amount
	Drawing A/c		7,00,000
	To Income Tax Due A/c			2,00,000
	To TDS Receivable A/c			5,00,000
	(Being Tax amount due)
	Income Tax Due A/c		2,00,000
	To State bank of India			2,00,000
	(Being tax balance payment paid)

Case 2: Refund Situation

Let’s assume tax amount 

• Income Tax refund due = 50,000
• TDS Receivable = 5,00,000

Before making journal entries we have to make ledger 

• State bank of India under Bank
• TDS Receivable under Current Assets
• Income Tax refund due A/c under Current Assets

Date	Particulars	L.F	Amount	Amount
15.03.2026	Income Tax refund due A/c		50,000
	To TDS Receivable A/c			50,000
	(Being TDS refund entry)
17.05.2026	State bank of India A/c		50,000
	To Income Tax refund due A/c			50,000
	(Being Tax amount received)

Case 3: Excess TDS Refund

Let’s assume tax amount 

• Drawing = 7,00,000
• TDS Receivable = 8,00,000

Before making journal entries we have to make ledger 

• Drawing under Capital 
• State bank of India under Bank
• Income Tax Refund Due A/c under Current Assets
• TDS Receivable under Current Assets

Date	Particulars	L.F	Amount	Amount
	Drawing  A/c		7,00,000
	Income tax refund due A/c		1,00,000
	To TDS Receivable A/c			8,00,000
	(being Tax refund due entry)
	State bank of India A/c		1,00,000
	To Income Tax refund due A/c			1,00,000
	(Being Tax amount received)

Conclusion 

In summary, advance tax and TDS are very important for the income tax system. They help collect taxes on time and make things easier for taxpayers at the end of the year. Getting the accounting right for advance tax, TDS, and the final tax amount is key for both companies and others. Companies usually track tax costs by setting aside a tax provision and adjusting for TDS and advance tax. Others see income tax as personal withdrawals. Knowing these accounting steps leads to better financial reports, easier tax compliance, and good prep for tests and real-world use.

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Sandeep Ghatuary

Finance & Accounting blogger simplifying complex topics.

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