Deferred Tax - assets/liability

This query is : Resolved

rajesh (Querist)
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17 June 2010 I require a guidance for calculation of Deferred Tax Asset / Liability. Following are the details.
1.Dep. As Per Accounts Rs. 45642/-
2.Dep. As Per Income Tax Rs.107160
3.Bonus Provision Rs. 149669
4.Excess provision for Tax Rs. 144519
5.Provision for leave encahment Rs. 25404
6.Provision for bad debts Rs. 5394
7. Profit as per books Rs. 1853841

Can anyone guide me with reasoning ?

Thanks

Prem Ketan

Prem Ketan (Expert)
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17 June 2010 First you have to calculate the Taxable income as per Income tax Act. as below
Book profit 1,853,841
Add: Dep as per a/c 45,642
Bonus prov (43B) 149,669
Excess tax prov 144,519
Prov Leave en (43B) 25,404
Bad debts prov 5,394
Less: Dep As per Tax 170,160
-----------
Taxable income 2,117,309

In this case you have to create deferred tax assets because your Taxable income is higher than Book Income and all item is timing difference.
Income as per Account 1,853,841
Income as per Tax 2,117,309
------------
263,468

Deferred tax assets 30.9% 81,412

Tax Expenses (1853841*30.9%) 572836 Dr
Def Tax Assts(as per above) 81412 Dr
Provision for Income tax 654248 Cr
(2117309*30.9%)

rajesh

rajesh (Querist)
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17 June 2010 Dear sir,

Excess tax provision of Rs. 144519 for the earlier year is credited to P & L account. Does it make difference to the computation suggested by you.

Thanks

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