Deferred tax

Dear Ravi,

In this case, you may certainly offset the deferred tax assets and the deferred tax liabilities with each other, and show the related balance amount. Since IAS-12 specifies the conditions for offsetting the two, which have also been adopted by AS-22, which reveals that;

1 –  the entity has a legally enforceable right to offset the deferred tax asset with deferred tax liability and vice versa; and,

2- The deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority.
The aforesaid two conditions are undoubtedly met.

However, if you have deferred tax asset on all differences EXCEPT revaluation surplus (or gain on available for sale unquoted investment etc) on which you have liability; and you don't estimate to realize deferred tax asset on such (profit or loss related differences) in foreseeable future, you will not recognize it. However, at the same time you will recognize deferred tax liability on items directly charged in equity as per IAS 12. These two cannot be offset.

It means, you will not be offsetting one type of deferred tax asset (not to be recognized) against the deferred tax liability of surplus/directly chargeable in equity.

Let me know if confusion still exists.                                           

Best Regards,

Desperado.