Deferred tax

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Querist : Anonymous

Querist : Anonymous (Querist)

09 August 2012 what will be effect of deffered tax on depreciation.

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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09 August 2012 Generally, deferred tax liability is created on the depreciation and it gets reversed in the future years

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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09 August 2012 This is because in case on income tax act WDV is followed and depreciation rate is generally higher as compare to rate prescribed under companies act.

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CA Amit Jaiswal

CA Amit Jaiswal (Expert)
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09 August 2012 It is depreciation that affects Defffered Tax, not the vice versa.

CA Amit Jaiswal

CA Amit Jaiswal (Expert)
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09 August 2012 The amt will depend on the differece between Dep as per IT Act and Dep as per Books.

Querist : Anonymous

Querist : Anonymous (Querist)

09 August 2012 if net profit is rs. 7,00,000/-

deferred tax credited to p/l a/c is rs. 50,000/-

what will be business income?

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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10 August 2012 Deferred tax is part of Provision for current tax-
It is presented in P&L like-

Net profit before tax XXXX
Less: Provision for tax
Current tax XXXX
Deferred tax XXXX
Net Profit after tax XXXX

Accordingly,
Net Profit 700000
Less:-
Current tax XXXX
Deferred tax(50000)
Net Profit after tax 750000

Note:- Current tax is not computed

Querist : Anonymous

Querist : Anonymous (Querist)

10 August 2012 Sir, read my question carefully,
i wrote deferred tax credited to p/l BUT NOT DEBITED.

U CALCULATE ABOVE AS IT IS DEBITED?

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CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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10 August 2012 That is why I have added. Pls look my answer very carefully.
The amount shown is in bracket. it is always shown like this only.