Can anybody throw some light on deferred tax.
To keep it simple, if accounting pr > IT profit, it is DTL and if accounting pr < IT profit, it is DTA.
Rgds
Rajashree
8 Replies
kaushal
(w)
(545 Points)
Replied 04 February 2008
u can go other way roung too
accounting tax> income tax paid
then DTL
other wise DTA
harinath
(student)
(229 Points)
Replied 04 February 2008
net income before tax is called accounting income. tax collected on this income is tax expense.
on the other hand, the income to the extent the IT authorities takes into consideration is called taxable income. tax calculated on such income is called current tax.
the difference between tax expense & current tax is called deferred tax. this is timing difference only.
if tax expense is more than current tax... that is deferred tax liability (DTL).
(for example, if our expense is not fully/partly paid it is outstanding expense which is nothing but a liability. so as the case with tax also, here we call it as DTL.
the contrast to the above is deferred tax asset.
harinath
(student)
(229 Points)
Replied 04 February 2008
net income before tax is called accounting income. tax collected on this income is tax expense. on the other hand, the income to the extent the IT authorities takes into consideration is called taxable income. tax calculated on such income is called current tax. the difference between tax expense & current tax is called deferred tax. this is timing difference only. if tax expense is more than current tax... that is deferred tax liability (DTL). (for example, if our expense is not fully/partly paid it is outstanding expense which is nothing but a liability. so as the case with tax also, here we call it as DTL. the contrast to the above is deferred tax asset.
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