Advance Payment to Supplier With VAT & Tax Accounting Journal Entries

RMG Life Information

Advance Payment to Supplier With VAT & Tax Accounting Journal Entries is the best way to maintain the creditors account. The entry now is to debit the Advance to supplier account which is under current assets & credit the account by the name of supplier, close the Advances to supplier account by crediting When the bill or invoice is received, and record the cash or bank payment for the balance which is by crediting the Cash or bank account.

The below correct journal entry is good for better understanding of preparing financial statement.

Example: Purchase Air Conditioner (AC) from MK Electronic Tk. 53,750.00 in advance with 7.5% VAT & 2% TDS.

Few others accountant are maintain the treatment with the easy way of below journal entries.

What is the format, Calculation and Section of final settlement of tax to NBR.

Tax Deduct at Source Non-rasident

The Bangladesh RMG sectors minimum tax rate is fixed 0.60%  U/S: 53BB of ITO-1984, tax at source on export when the export is realized by commercial Bank.

The format, Calculation and Section of final settlement of tax to NBR after closing the audit by external Auditor to submit the return in specific announced date by the government.

XYZ Company

Details of Income Tax Calculation

For the Year Ended 30’June-2017

Assessment Year: 2017-2018

Particulars Tax Rate Amount In Taka Amount In Taka
Tax Deducted at Source U/S: 53BB of ITO-1984 7,475,000
Net Profit from Operation as per Audit Report 27,000,000
Income Tex Liabilities @ 12% 3,240,000
Tax Deducted at Source U/S: 53BB of ITO-1984 (7,475,000)
Income Tax Liabilities on Business Income (4,235,000)
Income from other Source 19,500,000
Income Tax @ 35% 2,345,000
Cash Incentive 3% 14,000,000 420,000
Bank Interest (STD, FDR, etc.) 35% 5,500,000 1,925,000
AIT on Bank Interest 10% 550,000
AIT on Bank Cash incentive 3% 420,000 (970,000)
Income Tax Liabilities on Others Income 3,315,000
Total Income Tax Liabilities 3,315,000
Authorized Representative



Tax Deduct at Source Non-rasident

Any company are prepared pretax income statement for book purpose also they are compute tax for govt. tax regulation purpose respectively. So, for that two reasons some differences are exist, for example, in the timing of revenue recognition and the timing of expenses recognition.

The definition of deferred tax asset and liabilities are-

The deferred tax consequenes attributable to taxable temporary differences.


ABC Company pretax income BDT. 100000, Depreciation Charge in income statement is BDT. 30000 but tax purpose depreciation is BDT. 46000.


Rent income shown BDT. 120000, but Tax authority measure BDT. 22000 more.


Fine imposed for pullution shown as expenses BDT. 11000.


Tax Rate 30%

DTL = Deferred Tax Liability = Excess Depreciation to be charged as per tax authority.

Amount = BDT. 46000-30000 = 16000

DTA = Deferred Tax Asset = Excess Rent income Charged as per tax Authority.

Amount = BDT. 22000

So, Taxable income = (income as per book + non-allowable expenses) + Deferred tax asset (DTA) item – Deferred Tax Liability (DTL) item

=BDT.  (100000+11000)+22000-16000

= BDT. 116000

So, Journal Entry:

Dr. Income tax Expenses (100000+11000)*30%                             BDT. 33300

Dr. Deferred tax asset (22000*30%)                                                   BDT. 6600

Deferred tax liability (16000*30%)                                                           BDT. 4800

Income tax payable ( 116000*30%)                                                         BDT. 35100


if you have any queries please comments.

Another ITP (Income Tax Practitioner) FAQ.

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