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How to Record Income Tax Payment Journal Entry in TallyPrime (2025 Guide)

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How to Record Income Tax Payment Journal Entry in TallyPrime (2025 Guide)
By CA. Vishal Mehta   |   Published on: 14-12-2025 | 7 min read

Paying and correctly recording Income Tax in accounting software is essential for accurate books, compliance, and smooth audits. In TallyPrime, income tax payment entries are simple if done correctly—but many users still confuse them with GST or expense entries.

This complete guide explains how to record Income Tax payment journal entries in TallyPrime, step-by-step, with practical examples and best practices for businesses, professionals, and CAs.


What Is Income Tax Payment in Accounting?

Income Tax is a direct tax paid on profits earned by individuals, firms, and companies. Unlike GST, income tax is not an expense of business operations, but an appropriation of profit.


Frequently Asked Questions

Is income tax an expense in TallyPrime?

No. Income tax is an appropriation of profit, not a business expense.

Which voucher is best for income tax payment?

Payment Voucher is recommended. Journal Voucher is optional.

Can advance tax and self-assessment tax use the same ledger?

Yes. Use Income Tax Payable and mention details in narration.

Where should income tax interest be recorded?

Under Indirect Expenses, not Income Tax Payable.

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