How do you treat over or under provision of income tax?

Best way to understand is through an example:

If in 2010 you have a provision for tax of $2,000 payable for accounting. However the actual tax paid was $1,500. You would have an over provision of income tax. So once the tax is paid in 2011 it will Dr Provision Cr Bank. So in 2011 the amount of the over provision must be adjusted by:

Dr Provision for tax

Cr Income tax expense

This will clear out the tax provision for 2011 resulting from the over provision.

Same concept applies to under provsions.