Differed TAx

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Vinod (Querist)

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)

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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