Deferred Tax

This query is : Resolved

Mukesh Kumar (Querist)
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13 June 2009 Hi everyone

Hope u r doing great !

I have a Query ..

I am working in a co. which was started in June 2008.
Now I want to know about Deferred Tax & how is this Tax calculated ..

Pls. answer this query ..

Thanks in advance

Best of luck for a beautiful weekend.

Take Care..
Mukesh Kumar
Delhi

CA Anisha Ray

CA Anisha Ray (Expert)
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13 June 2009 Deferred taxation is calculated because, there is always a difference between Book profits and Tax profits.

This difeerence could be due to following reasons:
1) Depreciation as per books and depreciation as per Tax laws do not match.

2) Provisions made in the books that are not allowed as per tax laws.

3) Expenses disallowed in tax on non - payment of TDS, whic will be allowed in the year in which tax is paid etc.

This results in a mismatch betn Book profit and tax Profit and results in application of this AS-22.

This mismatch could be permanent or a timing difference.

Permanent means the expenses will never be allowed in Income Tax.

Temporary means it will be allowed in future.

Deferred Taxation is calculated on temporary differences @ the current rate of taxes.

Mukesh Kumar

Mukesh Kumar (Querist)
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13 June 2009 .

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Aditya Maheshwari

Aditya Maheshwari (Expert)
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14 June 2009 Yes anisha ray is correct but deferred tax is calculated at the future years tax rate. The above is just an illustrative list and not exhaustive. On every timing difference deferred tax asset or liability can be created at future years tax rate. Read Accounting Standard (AS) - 22 as issued by ICAI for further information.

Mukesh Kumar

Mukesh Kumar (Querist)
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15 June 2009 Thanks both of u.
have a nice day.

Mukesh Kumar

Mukesh Kumar (Querist)
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15 June 2009 Thanks both of u.
have a nice day.