Treatment of deferred tax

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Sandeep (Querist)

08 December 2010 Hiii Friends..

can any one plz tell me the concept of deferred tax and its adjustment in coming years...

plz help me solve the above problem...

CA. R. B. SAH

CA. R. B. SAH (Expert)

08 December 2010 As per Accounting Standard 22, disclosure for deferred tax should be made separately in the books of accounts.
Deferred tax liability is arised due to timming difference.
Timing difference means the expenses as per books of accounts may differ as per income tax and such expenses may be reversed in next year. IN other words, expenses allowed in the books of accounts may be disallowed in income tax and allowed in the next year in the income tax or expenses allowed partially in accounts but allowed 100% in income tax.
There may be deferred tax liability or asset.
if accountin income is more than taxable income and such difference is due to timing difference, then there will be DTL(Deferred tax Liability).
If ACCOUNTING Income is Less Than Taxable income and differnce is due to timing difference, then there will DTA ( DEFERRED Tax Liability).
Provisions of AS-22 shall not be applied during tax holidays periods.
If DTA OR DTL has been provided in the books of accounts then such DTA OF DTL SHOULD be reversed in the next year at applicable rate tax.

Sandeep

Sandeep (Querist)

08 December 2010 Thanks for the above explanation...

But i want to ask one thing at the time of calculation of tax.

The Tax calculated as per income tax act & As per Co's Act is different in amount.

Can this Difference is also called a Deferred tax liability.

Please clarify me.

and if answer is yes, then its treatment in next years books.

Please clarify the above matter.

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