Creation of Deferred Tax Asset for SEZ Unit

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Amit Mistry (Querist)
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14 February 2009 Dear Sir,

I have one client located in SEZ, and its in second year of operation. Since in first five year, there is no taxation and after that 50% of the profit is taxable, Is there any requirement for creating Deferred tax Asset from now?

Regards,

Amit

CA Amarpal

CA Amarpal (Expert)
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14 February 2009 Dear Amit,

Deferred Tax Asset/ liabilities are created according to AS -22.

Deferred tax asset or liability is the amount of tax which may be payable or receivable because of the income or expenditure of the current year.

This is the tax on difference of income/ expenditure between accounting income & taxable income.

In your case, as per given facts, there is no taxation on profits upto 5 years. Hence, no question deferred tax assets or liability.

Please refer. AS-22 "taxes on Income"

With best wishes
CA. Amarpal
amarpal@icai.org