Deferred tax

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Querist : Anonymous

Querist : Anonymous (Querist)

09 August 2012 what will be effect of deffered tax on depreciation.

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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09 August 2012 Generally, deferred tax liability is created on the depreciation and it gets reversed in the future years

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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09 August 2012 This is because in case on income tax act WDV is followed and depreciation rate is generally higher as compare to rate prescribed under companies act.

CA Amit Jaiswal

CA Amit Jaiswal (Expert)
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09 August 2012 It is depreciation that affects Defffered Tax, not the vice versa.

CA Amit Jaiswal

CA Amit Jaiswal (Expert)
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09 August 2012 The amt will depend on the differece between Dep as per IT Act and Dep as per Books.

Querist : Anonymous

Querist : Anonymous (Querist)

09 August 2012 if net profit is rs. 7,00,000/-

deferred tax credited to p/l a/c is rs. 50,000/-

what will be business income?

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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10 August 2012 Deferred tax is part of Provision for current tax-
It is presented in P&L like-

Net profit before tax XXXX
Less: Provision for tax
Current tax XXXX
Deferred tax XXXX
Net Profit after tax XXXX

Accordingly,
Net Profit 700000
Less:-
Current tax XXXX
Deferred tax(50000)
Net Profit after tax 750000

Note:- Current tax is not computed

Querist : Anonymous

Querist : Anonymous (Querist)

10 August 2012 Sir, read my question carefully,
i wrote deferred tax credited to p/l BUT NOT DEBITED.

U CALCULATE ABOVE AS IT IS DEBITED?

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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10 August 2012 That is why I have added. Pls look my answer very carefully.
The amount shown is in bracket. it is always shown like this only.

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