Deffered Tax
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
30 August 2010
Dear Experts,
Please inform the meaning of Deffered Tax and when it applicable.
Please inform the meaning of Deffered Tax and when it applicable.
30 August 2010
read AS-22 u will get the clarity
deffered tax arises when there is differecence between incometax as per book as per accounts and income tax act and that is due to temaporary difference.
and deffered tax is of two types DTA and DTL.
Once read that standard u will get the idea of all these terms
deffered tax arises when there is differecence between incometax as per book as per accounts and income tax act and that is due to temaporary difference.
and deffered tax is of two types DTA and DTL.
Once read that standard u will get the idea of all these terms
30 August 2010
Provision for deffered tax is to be made as required by AS 22.
Profit of an entity as per the books will be different from the income computed as per Income Tax Act. The possible reasons for this is change in depreciation rate, certain expenses not allowed as per IT Act like items covered U/s.43B, 40(a).....
Provision for Income-tax is made in the books based on the income computed as per IT act. However, the expenses which are disallowed in one year are allowed to be deducted on payment basis in the year of payment (43B, 40(a)) and depreciation which over the period of time will come in line with both books and IT. These items which are capable of being reversal over a period of time are called timing differences. Such differences are capable of adjustment and hence the tax effect of the same needs to be provided in the books so as to give a true & fair view ........
In view of above, amount equal to tax rate on timing differences is provided in the books which denotes either benefit to be availed or foregone in future.
Profit of an entity as per the books will be different from the income computed as per Income Tax Act. The possible reasons for this is change in depreciation rate, certain expenses not allowed as per IT Act like items covered U/s.43B, 40(a).....
Provision for Income-tax is made in the books based on the income computed as per IT act. However, the expenses which are disallowed in one year are allowed to be deducted on payment basis in the year of payment (43B, 40(a)) and depreciation which over the period of time will come in line with both books and IT. These items which are capable of being reversal over a period of time are called timing differences. Such differences are capable of adjustment and hence the tax effect of the same needs to be provided in the books so as to give a true & fair view ........
In view of above, amount equal to tax rate on timing differences is provided in the books which denotes either benefit to be availed or foregone in future.
30 August 2010
As per AS-22, a company is liable to provide for deferred tax liability on the first day it accounts for such income. The basic premise being that revenues and expenses of an accounting period should meet matching principle and disparity in computing income for tax and book purposes should be appropriately resolved.
Differences between the two sets of computation of income can be classified into two categories; permanent and timing differences. Permanent differences arise with respect to expenditure legitimately incurred but are wholly or partially disallowed for tax purposes.
Such expenses do not give rise to deferred tax provision. Temporary differences are those that arise due to timing reasons. A typical example is provision for depreciation with varying rates for book purposes and tax purposes. Rates prescribed for company law are minimum rates, taking into consideration useful life of the asset.
Differences between the two sets of computation of income can be classified into two categories; permanent and timing differences. Permanent differences arise with respect to expenditure legitimately incurred but are wholly or partially disallowed for tax purposes.
Such expenses do not give rise to deferred tax provision. Temporary differences are those that arise due to timing reasons. A typical example is provision for depreciation with varying rates for book purposes and tax purposes. Rates prescribed for company law are minimum rates, taking into consideration useful life of the asset.
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
- TDS on Purchase of Immovable Property by NRI from NRI
- Current Account Opening for Sole Proprietorship with Udyam Certificate - Zero Turnover
- Stamp Paper for partnership firm change new income tax 2025
- Capital gain from sale of house property
- When TDS on GST applied
- Before GSTAT- APL-02 Vs APL-04
- Annual return in Gst
- 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
