Journal Entry for Income Tax

Income Tax is paid by the business on the profit earned during the year. Income Tax is a personal liability of the proprietor. The journal entry will be:

A. Payment of Income Tax:

Journal Entry: 

B. Refund of Income Tax:

Journal Entry: 

Example: 

1. Income Tax paid ₹1,500.
2. Refund of Income Tax received ₹500.

Solution: