Live Course on Drafting of Appeal and Reply of Penalty Notice by CA Sachin Sinha. Register Now!!

as 22

rahul (article audit executive) (29 Points)

06 February 2008

hello to everyone .Can anyone please help me in As-22 as i am finding difficulty in recognising deferred tax asset and deferred tax liability and when and how to understand which is to be created and when

Reply
Follow
Share

5 Replies

(Guest)

how to calculate dta and tdl under As-22

kaushal (w) (545 Points)
Replied 06 February 2008

IF provision for tax made in accounts > actual incometax paid then DTl will arise otherwise DTA will arise

Jagdish Trivedi (Practicing CA) (41 Points)
Replied 06 February 2008

Rahul, AS-22 is applied when there is difference in profit as per Companies Act and Profit as per Income Tax Act, and this difference should be in the nature of timing difference. Now, when Profit as per Comp. Act is lower than the profit as per IT Act, in that circumtances you need to make a provision of DTL, as the profit as per Co. Act is lower in compare to income tax and we need to follow income tax. Hence, co. needs to create notional liability to pay its future obligation. For DTA vis-a-versa situation.

(Guest)

Deffered Tax situation is created in every level of co. Infact the several nature of expenses which is allowed in 'profit and loss a/c' , may be allowed excess or less under the Income Tax Act during calculating the Inome tax provision, e.g. the expenses u/s 43B, Depreciation, etc. That is the reason, tax which has to paid in a year may be deffered for next few years. It is DTL or DTA, very simple to understand, if our tax paying status deferred to next few years that means it is the liability to pay and in vice versa that is if our expenses which is able to a/c for in one year but under the IT Act allowed in several years, in other words more tax to be paid in a year and it is the notional asset to recover.