Differed TAx

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Vinod (Querist)
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26 August 2009 i want to calculate Differred Tax, i m not understand how i calculat ,
pls advice me with any example

pls help me

Thaks

Vinod Kumar

chetan soni

chetan soni (Expert)
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27 August 2009 Deferred tax is arise on account of timing permanent diff. on tax as per accounting profit & tax on taxable income as per income tax provisions.

Eg : Lets assume i have book profit of 150000.00. There is one disallowance u/s 43B of Rs. 50000.00. So the deferred tax working would be like this:

Tax on accounting profit is Rs. 45000.00
(@ 30% on 1.5L)

Please note we will not make any deferred asset or liability for permanent diff. arise to @ 30%

Deferred tax asset on account of disllowances Rs. 15000.00 (@ 30% on 50K)

Tax as per income tax act : 60000
(150000+50000)@ 30%

We will pass two entry in the books of accounts.

1. Provision for Income tax liability
Income tax account Dr. 60000.00
To Provision for Taxation A/c Cr. 60000.00

2. Deferred tax asset
Deferred Tax Asset A/c Dr 15000.00
(In Current asset gr. in tally)
To Deferred tax income Cr. 15000.00
(in Misc income in P& L A/c)

Please note we will not make any deferred tax asset or liability for permanent differences as the same will be able to reverse in the next year.

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