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deferred tax

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This query is : Resolved

rajesh (Querist)

28 May 2011 I have passed entries of deferred tax for following items for the year 2009-10.
1. depriciation
2. leave encashment
3.provision for bad debts
4. bonus

my question is what effect to be given in the year 2010-11 regarding deferred tax entry passed in 2009-10? Or every year new entries to be passed?

Also whether deferred tax Assets/ Liability remains in the book forever ?

Thanks

RAHUL SARIA (CA, CS)

RAHUL SARIA (CA, CS) (Expert)

29 May 2011 Deferred tax does not remain forever, otherwise it wouldnt have been called as deferred.

The deferred tax created on timing diffs.(depn etc.) would get reversed in subsequent years, and further new DTA/DTL may be generated.
Eg. On Bonus not being paid, you made DTA @ 30% (say), next year when you pay the bonus, the DTA shall be reversed, and any new unpaid bonus may give rise to DTA.

Pl refer Accounting Standard-22 issued by ICAI.

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