03 September 2011
sir, my name is abhishek i face difficulty at the time of calculating defferred tax would you please help me in this matter i would like to know that what is defferred tax assets and liability and we can calculate it... please suggest me Thanking you
03 September 2011
Deferred Tax is only an accounting concept, means is a future tax liability or asset resulting from timing difference or temporary difference. Best example of differed tax liability is depreciation on fixed asset say Plant & Machinery: Depreciation as per accounts is charged at lower rate when compared to income tax rates there arises more depreciation in income tax resulting into lower tax liability in the particular year, in future years depreciation gradually reduces on the particular asset results into more tax, therefore difference in depreciation is to be treated as deferred tax liability. Deferred Tax Asset: Example carry forward of business losses and used as future write off kept as an asset in the balance sheet.
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