What account 6410 is for
A company that has calculated a tax does not pay the money at that very moment: some time passes between calculating and paying. During that gap the company owes the state, and this debt shows up in sub-account 6410 "Payables to the budget (by type)". Under paragraph 273, information on current obligations for payments to the budget is collected here.
The words "(by type)" in the name are there for a reason: under paragraph 274, analytical accounting for 6410 is kept separately for each type of tax. That is, the VAT debt, personal income tax withheld from wages, corporate profit tax and the rest do not go into one pot: each sits in its own analytical account.
A liability account: what that means
In the chart of accounts, group 6400 has type "P" (liability). Under paragraph 3, in a liability account the balance and increases of an obligation are shown on the credit side and decreases on the debit side. Applied to 6410:
- tax assessed: the debt grows, 6410 is credited;
- tax paid or an advance offset: the debt shrinks, 6410 is debited;
- the credit balance shows the amount of tax not yet paid.
What goes to the credit side
Under paragraph 274, the credit side records the amount payable to the budget, and the corresponding account shows where the tax came from. All credit rows of the table in paragraph 275:
| Where the tax came from | Debit | Row |
|---|---|---|
| Contributions, taxes and levies charged to period expenses | 9430 | 1 |
| VAT and excise tax on sales of products, goods, work, services, fixed assets and other assets | 4010 | 2 |
| Money returned from the budget or credited against future payments | 5110, 5210, 5530, 4410 | 3 |
| Personal income tax withheld from wages | 6710 | 4 |
| Personal income tax withheld from dividends | 6610 | 5 |
| Payments calculated on profit | 9810-9890 | 6 |
Entries on the credit of 6410 also appear in the tables of other groups. All such rows in the Instructions (other than paragraph 275):
| Transaction | Debit | Paragraph, row |
|---|---|---|
| Payments to the budget included in the cost of capital investments | 0810-0890 | para. 75, row 17 |
| Deferred corporate profit tax on temporary differences | 0950 | para. 84, row 15 |
| Current portion of tax on expenses relating to temporary differences | 3210 | para. 166, row 1 |
| Personal income tax withheld at source from dividends | 6610 | para. 285, row 2 |
| VAT charged on disposal of a fixed asset | 9210 | para. 394, row 17 |
| Fine charged by decision of the tax authority | 9430 | para. 412, row 16 |
| Payments to the budget calculated on profit during the year | 9810, 9820 | para. 434, row 1 |
What goes to the debit side
Under paragraph 274, there are two kinds of debit entries: money actually transferred to the budget (against cash accounts) and the offset of advances paid earlier at final settlement (against group 4400). Under the table in paragraph 275:
- tax paid from the bank or another cash account: Dr 6410 Cr 5010-5530 (row 7);
- VAT on purchased resources held in 4410 offset: Dr 6410 Cr 4410 (row 8);
- tax paid out of a bank loan or borrowing received: Dr 6410 Cr 6810-6840, 7810-7840 (row 9).
Points to watch
- Do not confuse 4410 and 6410. 4410 is an advance paid to the budget beforehand and VAT on purchases (para. 190; in the chart group 4400 is an asset account), while 6410 is a debt to the budget. At final settlement they are closed against each other: Dr 6410 Cr 4410 (para. 191, rows 3 and 4).
- Money returned from the budget also passes through 6410. If funds are returned from the budget or credited against future payments, row 3 of the table in paragraph 275 gives Dr 5110, 5210, 5530, 4410 Cr 6410.
- Long-term deferral of tax. If a long-term deferral is granted for a tax, the debt moves from current to long-term liabilities: Dr 6410, 6510-6530 Cr 7240 (para. 328, row 7).
- A fine also goes to 6410. A fine charged by decision of the tax authority is also recorded on the credit of 6410 as a debt to the budget (para. 412, row 16). Keep it in a separate analytical account, otherwise it gets mixed up with the tax itself (practical tip).
- If a debit balance appears (practical tip). 6410 is a liability account, so its balance is normally a credit balance. If a debit balance shows for some type of tax, check the entries first: a payment may have been recorded twice, an assessment entry may be missing, or a payment may have been posted to another type of tax.
Main journal entries 12
Debit and credit are as in the model table of Appendix 2 to NAS No. 21. The transaction text briefly restates the table row.
| Transaction | Debit | Credit | Source |
|---|---|---|---|
| Debt to the budget accrued for various contributions, taxes and levies charged to period expenses | 9430 | 6410 | NAS No. 21, para. 275, row 1 |
| VAT and excise tax charged on sales of products, goods, work and services, as well as fixed assets and other assets | 4010 | 6410 | NAS No. 21, para. 275, row 2 |
| Funds returned from the budget or credited against future payments | 5110, 5210, 5530, 4410 | 6410 | NAS No. 21, para. 275, row 3 |
| Personal income tax withheld from individuals' wages | 6710 | 6410 | NAS No. 21, para. 275, row 4 |
| Personal income tax withheld from accrued dividends | 6610 | 6410 | NAS No. 21, para. 275, row 5 |
| Payments to the budget from profit accrued | 9810–9890 | 6410 | NAS No. 21, para. 275, row 6 |
| Payments transferred to the budget | 6410 | 5010–5530 | NAS No. 21, para. 275, row 7 |
| VAT on purchased resources, goods, work and services offset | 6410 | 4410 | NAS No. 21, para. 275, row 8 |
| Debt to the budget paid out of bank loans and borrowings received | 6410 | 6810–6840, 7810–7840 | NAS No. 21, para. 275, row 9 |
| Fine charged by decision of the tax authorities | 9430 | 6410 | NAS No. 21, para. 412, row 16 |
| VAT charged on disposal of fixed assets | 9210 | 6410 | NAS No. 21, para. 394, row 17 |
| Long-term deferral granted for taxes and levies | 6410, 6510–6530 | 7240 | NAS No. 21, para. 328, row 7 |
Example
At the start of the month "Tuproqqal'a g'isht" LLC (a fictional company) had no balance on 6410. During the month the following happened (VAT 12%; the personal income tax and fine amounts are given as ready figures taken from the settlement documents):
| No. | Transaction | Dr | Cr | Amount, soums |
|---|---|---|---|---|
| 1 | Bricks worth 150,000,000 soums excluding VAT sold, VAT charged (150,000,000 × 12%) | 4010 | 6410 | 18,000,000 |
| 2 | Personal income tax withheld from employees' wages | 6710 | 6410 | 2,300,000 |
| 3 | Fine charged by decision of the tax authority | 9430 | 6410 | 400,000 |
| 4 | VAT on purchases held in 4410 offset (95,000,000 × 12%) | 6410 | 4410 | 11,400,000 |
| 5 | VAT and personal income tax paid to the budget from the bank | 6410 | 5110 | 8,900,000 |
Sources of the entries: 1 — para. 275, row 2; 2 — para. 275, row 4; 3 — para. 412, row 16; 4 — para. 275, row 8; 5 — para. 226, row 18 (also para. 275, row 7).
Analytical accounting for 6410 (by type of tax):
| Type of tax | Credit (assessed) | Debit (offset and paid) | Closing balance for the month |
|---|---|---|---|
| VAT | 18,000,000 | 11,400,000 + 6,600,000 | 0 |
| Personal income tax on wages | 2,300,000 | 2,300,000 | 0 |
| Fine | 400,000 | 0 | 400,000 (credit) |
| Total | 20,700,000 | 20,300,000 | 400,000 (credit) |
Check: VAT payable is 18,000,000 − 11,400,000 = 6,600,000 soums; the 8,900,000 paid from the bank = 6,600,000 + 2,300,000. Total: 0 + 20,700,000 − 20,300,000 = 400,000 soums credit balance, which is the fine not yet paid.
Had the company kept 6410 as one lump sum, it would have had to go through every document again to find out which payment the 400,000 soums belong to. Separate analytical accounting by type of tax (para. 274) makes that unnecessary (example prepared by the author).