Deferred tax (Income Tax)

This query is : Resolved

Author : Anonymous

( Author )
09 August 2012

what will be effect of deffered tax on depreciation.

CA CS Amit S. Kedia

( Expert )
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

( Expert )
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

( Expert )
09 August 2012

It is depreciation that affects Defffered Tax, not the vice versa.

CA Amit Jaiswal

( Expert )
09 August 2012

The amt will depend on the differece between Dep as per IT Act and Dep as per Books.

Author : Anonymous

( Author )
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

( Expert )
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

Author : Anonymous

( Author )
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

( Expert )
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.