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Deferred Tax

rutuja prabhune (107 Points)

28 April 2020

How to adjust the Deferred Tax Liability of Previous Financial Year in Current F.Y.

(There is just credit balance reflected on Balance Sheet of Previous Year, no adjustment seems to have made)

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6 Replies

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 28 April 2020

Supposing if previous year’s Deferred tax liability Cr. In the balance sheet is 1000₹, PBT is 10,000, Current tax rate is 20%, then:

PBT 10,000₹

-2000₹ (10000*20%)

- Deferred tax 1,000

= 7000₹ PAT.

when you have previous years balance as 500₹ provision for deferred tax in SOFP, the:

10000₹

-2000₹

-(500-1000) 500₹

= 7,500₹ PAT.

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sanjith kotni (Articled assistant) (663 Points)
Replied 28 April 2020

Hi Rutuja Prabhune -

I made complete analysis with example on deferred tax adjustments solely for your issue..
just visit my blog here.
-https://sanjithkotni.blogspot.com/2020/04/deferred-tax-accounting-as-per.H T M L?m=1

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SUSHANT BIDAYE (597 Points)
Replied 28 April 2020

You need to give more details.

what is the nature of p.y. deferred tax liability and the reason of reversal.

adjustment is simple.

deferred tax expense cr &
def. tax liability. dr.

but the reason needs to be understood

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sanjith kotni (Articled assistant) (663 Points)
Replied 28 April 2020

Hi rutuje.
Visitmyblog- sanjithkotni.blogspot.com

I explained in the blog only for your issue.Please visit and get it clarified.And if you have any further doubt comment there or here

1 Like