Deferred tax

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Gnanadeep (Querist)

15 September 2014 What is deferred tax ,how to calculate deferred tax asset, deferred tax liability & its link between companies act and income tax?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

15 September 2014 In view of higher depreciation allowed in income tax than book depreciation as per companies Act during the current year, we will be paying lesser tax during the year which will be reversed in the subsequent years. To the extent of lesser tax paid during the year on account of depreciation deferred tax liability is created as per the requirement of Accounting standard 22.
Deferred tax asset is created in respect of carry forward losses and provisions.

Gnanadeep

Gnanadeep (Querist)

17 September 2014 can give accounting entries for deferred tax asset and deferred tax liability in books and its appearance in balance sheet i.e., in which side of B/S they appear

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

17 September 2014 The entries are:
Deferred tax Dr
To deferred tax liability cr.

Deferred tax asset dr
to deferred tax cr.

Net of deferred tax liability and deferred tax asset will be shown in the balance sheet as deferred tax liability when the deferred tax liability (liability side) is more and as deferred tax asset when it is more(asset side)
Please see schedule III of Companies Act 2013.

Gnanadeep

Gnanadeep (Querist)

17 September 2014 I got required point,thank q for your answer

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