14 October 2011
My company is in its first year of business.so it has shown profit as per accounts but as per income tax its still in loss. so my question is whether i need to consider the loss for deffer tax calculation ??...
14 October 2011
Yes you have to compute deferred tax! This is because this is not a permanent difference but a timing difference. Hence a deferred tax computation is must.
Because in the future you are going to get the benefit of this loss as per income tax as this loss can be carried forward for set off against future business profits.
However you should consider this for deferred tax only if you can predict a future profit as per income tax act against you would get the opportunity to set off this business loss. If the chances of business profit as per income tax act is remote then dont recognise deferred tax as it would amount to permanent difference.
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