Differed tax liabilty and asset
This query is : Resolved
19 January 2014
Hello friends,
my dobut is differed tax liability is liability for the company or not?
example;
depreciation as per co. act 20000
depreciation as per it act 50000
difference is 30,000
in my point of view, compamy shows lesser depreciation and higher profit.hence cimpany will pay higher tax now when compared to income tax act.So it is asset or libility? vise-a-versa to differed tax asset?
please clarify
Nikhil Kaushik
(Expert)
19 January 2014
it is a deferred tax liability
see the difference in dep is 30000, for simplification lets assume tax on the same as 10000
Now the profit as per companies act should be higher by 10000..but the actual payment for tax shall be as per income tax act only...so this 10000 shall be payable in future period...therefore it is a liability..
for a very good understanding of deferred assets and liabilities please refer
https://www.caclubindia.com/articles/meaning-of-deferred-tax-liability-asset-in-simple-words-13385.asp#.UttXnPu6bVI
see the difference in dep is 30000, for simplification lets assume tax on the same as 10000
Now the profit as per companies act should be higher by 10000..but the actual payment for tax shall be as per income tax act only...so this 10000 shall be payable in future period...therefore it is a liability..
for a very good understanding of deferred assets and liabilities please refer
https://www.caclubindia.com/articles/meaning-of-deferred-tax-liability-asset-in-simple-words-13385.asp#.UttXnPu6bVI
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