Deferred tax rate
This query is : Resolved
04 October 2017
A Company is having turnover of less than Rs. 5 Cr. in FY 2014-15 as well as 2015-16. So while computing deferred tax for F.Y 2016-17 which is the relevant tax rate? Is it 29% (ie the income tax rate for A.Y 2017-18 given in Part I of Finance Act 2017) or whether it is to be calculated at 25% (ie the Advance Tax Rates for A.Y 2018-19 given in Part III of Finance Act 2017)? Please advice.
04 October 2017
Income tax rate for DTA /DTL is 29 percentage
04 October 2017
Sir, why is 25% (Tax rate for A.Y 2018-19) not considered as substantive rate for calculation of DTA/DTL even when it is clear that the company has to pay tax in future @ 25%?
04 October 2017
It is to be calculated at 25% (ie the Advance Tax Rates for A.Y 2018-19 given in Part III of Finance Act 2017).
04 October 2017
25% cannot be considered since it is not the tax rate or substantially enacted tax rate on the balance sheet date. Inference - clause 21 of AS 22.
Message likes :
1 times
04 October 2017
Finance Act Can it not be inferred as substantially enacted.
04 October 2017
Sir,
As per AS-22, clause 21, deferred tax assets and liabilities should be measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Substantive rate is defined in the AS, thus the general definition can be taken as substantively enacted tax rate is the rate that isn’t yet come into effect, but is fully expected to be in effect soon.
Moreover the tax rate @ 25% was brought in Finance Act, 2017, which was published in the Gazette of India on 31.3.2017. The Balance Sheet is prepared on 31.3.2017. So can 25% be treated as the substantive rate?
As per AS-22, clause 21, deferred tax assets and liabilities should be measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Substantive rate is defined in the AS, thus the general definition can be taken as substantively enacted tax rate is the rate that isn’t yet come into effect, but is fully expected to be in effect soon.
Moreover the tax rate @ 25% was brought in Finance Act, 2017, which was published in the Gazette of India on 31.3.2017. The Balance Sheet is prepared on 31.3.2017. So can 25% be treated as the substantive rate?
Message likes :
2 times
04 October 2017
Sorry, please read the above query as "Substantive rate is not defined in the AS, thus the" in place of "Substantive rate is defined in the AS, thus the "
04 October 2017
I agree with you that substantively enacted tax rate is the rate that isn’t yet come into effect, but is fully expected to be in effect soon. Moreover the tax rate @ 25% was brought in Finance Act, 2017, which was published in the Gazette of India on 31.3.2017.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- GSTR-1A How to update Invoice
- Excess salary payment.
- INTEREST APPLICABLE ON ITC REVERSAL PORTION
- Current Account Opening for Sole Proprietorship with Udyam Certificate - Zero Turnover
- TDS on Purchase of Immovable Property by NRI from NRI
- Stamp Paper for partnership firm change new income tax 2025
- Capital gain from sale of house property
- SFT Cash Deposit in Current Account
- Copyright software
- When TDS on GST applied
- Cash gift by grand mother to her grand daughter
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
- No Compliences after incorporation
- USEFUL LIFE OF USED/SECOND HAND COMMERCIAL VEHICLES
- Claiming TDS deducted by builder on Hardship compensation and Corpus
- Address Change to another state of a Registered Trust with 12AB approval
- Updated return in budget 2026
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
