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Defeerd tax urgent

Poonam (prop) (130 Points)

21 September 2015

deferred tax calculated on diff of dep on companies and dep on income tax .....or it is calculated as opening wdv of co and IT less closing wdv of co and IT .in case of sale of assets and written off assets there is difference in two?pls any one clarify which is suitable

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7 Replies

CA Srikanth Yadav (Chartered Accountant) (3162 Points)
Replied 22 September 2015

Deferred Tax is calculated on the difference between the depreciation charged to the P&L Acccont and the depreciation allowed as per Income Tax Act. Please refer AS 22 for a detailed guidance :)

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TEJAS KARNANI (student) (160 Points)
Replied 22 September 2015

DEFERED TAX CALCULATED ON DIFF B/W DEP CHARGED AS PER COMPANIES ACT & DEP AS PER INCOME TAX ACT......I THINK SALE OF ANY ASSET WILL NOT HAVE ANY IMPACT ON CALCULATION OF DEFERED TAX

Prabeen Jalan (NA) (33 Points)
Replied 22 September 2015

agreed with mr shrikant

Raghu Adiga (Airtcle Student ) (33 Points)
Replied 22 September 2015

Dear ma'am, Deffered tax is computed on d basis of timing difference between two laws. Accordingly, the dep charged to company as per the co act n as per the income tax act is need to concern. Suppose dep charged to the co as per the co act is more then it would be treated as deffered tax asset. If it is less then vice verse. The entry for DTA

Raghu Adiga (Airtcle Student ) (33 Points)
Replied 22 September 2015

Continued.... If it is less then it would be Deffered tax liability. Entry for DTA DTA a/c Dr To profit n loss a/c Entry for DTL P n l A/c Dr To DTL

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Raghu Adiga (Airtcle Student ) (33 Points)
Replied 22 September 2015

In your case dep would be charged for d sold asset as per co act. N there won't be any dep under the income tax act for d same. Therefore need not concern about wdv while arriving DTA/DTL computation. Once u get d Difference amount on dep u need to charge 30% plus cess plus surcharge(if applicable) to arraive DTA/ DTL.