Ishwarya (Chartered Accountant) (25 Points)
28 December 2011Dear CA Club India members
Can anyone tell me whether "Netting" settlement system is possible in India?
If it is possible, can you pls. name any comapany who currently does "netting" settlement?
If it is not possible, the reason for the same..
Thank you,
ASHISH JAIN
(STUDENT)
(240 Points)
Replied 30 December 2011
If I m not wrong, u r asking for netting settlement in context of tax settlement like provision for tax and advance tax.
In India, it is not allowed, as the Income Tax Department in India maintains different files for all the assessment years and wants all the assessees to account for separately for each one, that is why, u must have seen in balance sheets of some companies, provision for tax for different years are standing separately under provisions, like for 07-08 and for 08-09 and advance tax for some years is also standing in the assets side in the same balance sheet.
In case of deferred tax, the same thing is applicable, but as a normal practice, all the companies presently do the netting in case of deferred tax, as it has nothing to do with payment, it only keeps on adjusting itself year by year, but in case of tax other than deferred tax, netting is strictly not allowed.
I hope it helped u!!
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