Provisions are disallowed in income tax.
Why are they considered to calculate deferred tax assets?
As 22 deferred tax assets/liabilities
Arka Bose (None) (313 Points)
30 July 2013
Abhisek Rungta
(PRACTISING CHARTERED ACCOUNTANT)
(234 Points)
Replied 30 July 2013
Provisions are disallowed in Income Tax Act. But as per Accounting Standards we have to create provisions in the Books of Acounts. Both are different and you keep provision for Deferred Tax because of Difference ( Timing and Permanent ) difference between Income Tax books and as per Books of Accounts.
Abhisek Rungta
(PRACTISING CHARTERED ACCOUNTANT)
(234 Points)
Replied 30 July 2013
Provisions are disallowed in Income Tax Act. But as per Accounting Standards we have to create provisions in the Books of Acounts. Both are different and you keep provision for Deferred Tax because of Difference ( Timing and Permanent ) difference between Income Tax books and as per Books of Accounts.
CA vinod
(Chartered Accountant)
(518 Points)
Replied 30 July 2013
Differed tax will arise when there is a TIMING difference between Taxable income & Income as per Accounts. As you know provisions are not allowed as per IT Act, but allowed as per AS. Provision is a timing difference. for Ex. If you create provision for doubtful debts it is not allowed as per IT act, but when you write off these provision as bad debts then it will allowd under IT act. As provisions are not allowed as exp under IT act, it leads to Differed Tax asset which will be reversed in future.
Arka Bose
(None)
(313 Points)
Replied 30 July 2013
CA vinod
(Chartered Accountant)
(518 Points)
Replied 30 July 2013
AnubhavAggarwal
(associate)
(21 Points)
Replied 12 April 2015
Piyush Vasantrao Jadhav
(1)
(41 Points)
Replied 18 July 2015
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