Deferred tax liability

This query is : Resolved

preeti (Querist)
Follow

23 November 2009 In case of IT depreciation being more than Accounting depreciation, the deferred tax liability would arise. Should be shown in Balance Sheet of the same year in which it arises? Besides as far as its accounting treatment is concerned it would be shown in next year books. While calculating advance tax for this year, whether it should be taken into account for adjustment or not?

shakuntala chhangani

shakuntala chhangani (Expert)
Follow

23 November 2009 Hi Preeti, Deferred tax Liability will be shown separately in the Balance Sheet. you can adjust advance tax against Current tax (Tax laibility as per IT. when you calculate deferred tax liability you take next year's tax rate. In the next year if it does not get reversed then the amount will be restated applying further next year's tax rate. Regards,
CA Shakuntala Chhangani

preeti

preeti (Querist)
Follow

24 November 2009 Thanks but i would also like to know that AS 22 is mandatory or not? I have seen the Balance sheets of few Private Limited Companies which have not made any calculation or adjustment for deferred tax. Does it not create any default?

Upgrade to CAclubindia Pro. Subscribe Now!

Aditya Maheshwari

Aditya Maheshwari (Expert)
Follow

24 November 2009 It is mandatory to be followed. However if it is not created due to any reason the same should be written in the notes to accounts.

shakuntala chhangani

shakuntala chhangani (Expert)
Follow

24 November 2009 Hi again Preeti, As 22 is mandatory in nature. deferred tax liability must be calculated and provided for in all the cases whereas if it is deferred tax asset, it is recognised only if there is reasonable/virtual certainty, as the case may be. this might be the reason in your case. check notes to a/c. Regards