Festive Savings Are Here. Get 10% OFF on All CCI Pro Plans. Subscribe Now!

Deffered tax

Save Share

Join Us Follow Us Add as Source

This query is : Resolved

Report Query Ask a Query

Nikunj Shiyani

Nikunj Shiyani (Querist)

28 April 2014 sir,, why we needs to create deferred tax liability/asset??, plz give example also.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

28 April 2014 As per accrual concept, to recognize the tax expenses as and when they incurred we need to calculate the deferred tax liability/Asset. profit as per companies act and income tax act always vary, because both acts provisions are different, as same the tax calculation on profit also differ, we need to correct that difference, we need to calculate the deferred tax and account it.

Simple example, Depreciation rates under companies act and Income tax act different. due to this the profit also will vary under both act.for correct those difference, we need to calculate the tax on different amount and recongnise the same

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now