Can any one explain me how to calculate deffered tax asset or liability.
and the logic behind it.
Deffered Tax
(Guest)
RAJU
(LEARNER)
(1089 Points)
Replied 22 June 2009
We all know that Income of an assessee as per the books may not be same as that of Income as per the IT Act. Possible reasons may be change in depreciation rate, disallowances U/s.40(a), 43B etc., However, a disallowance in one year will be set off from the income in the subsequent years. These are known as timing differences. Though these are allowable in the subsequent years, provision of income-tax is made on actual basis for the that year in the books. Hence, tax on the timing differences is provided in the books so as to show a true and fair view as per AS 22.
CA. Rashi Goyal
(Chartered Accountant)
(512 Points)
Replied 22 June 2009
In addition to what Dharmaraju has mentioned. The provision is made for actual liabilty but the difference between tax on actual profit and taxable profit which is due to timing difference is also debited/credited to P/L account. This gives rise to the deferred tax asset/liabilty.
CA. Gurdeep Singh Chawla
(C A)
(7080 Points)
Replied 22 June 2009
Deferred tax is the tax effect of timing differences.
Timing diffe Timing differences are the differences between taxable income and accounting income for a period that originate in one period and are capable of reversal in one or more subsequent periods.
Examples:
- Depreciation rate/method different as per Accounts and Income tax Calculation
- Expenditure of the nature mentioned in Section 43B (e.g. sales tax charged in account on accrual basis but not paid; such sales tax will be an allowable expenditure in the year of payment and a disallowable expenditure in the year in which accrued)
CA Himanshu Kawatra
(Chartered Accountant and CS executive )
(55 Points)
Replied 22 June 2009
hello friends
Plz tell me whether DTA /DTL will be created on Accumulated Prov. of Gratuity or only on current year prov. of gratuity?
RAMANJU
(here to updating the knowledge)
(485 Points)
Replied 23 June 2009
RAMANJU
(here to updating the knowledge)
(485 Points)
Replied 23 June 2009
Landmark Judgments: Important Provisions of the EPF & ESI Act interpreted by the Honorable Supreme Court of India
CAclubindia
