Defeerd tax urgent
deferred tax calculated on diff of dep on companies and dep on income tax .....or it is calculated as opening wdv of co and IT less closing wdv of co and IT .in case of sale of assets and written off assets there is difference in two?pls any one clarify which is suitable
Replies (7)
Deferred Tax is calculated on the difference between the depreciation charged to the P&L Acccont and the depreciation allowed as per Income Tax Act. Please refer AS 22 for a detailed guidance :)
DEFERED TAX CALCULATED ON DIFF B/W DEP CHARGED AS PER COMPANIES ACT & DEP AS PER INCOME TAX ACT......I THINK SALE OF ANY ASSET WILL NOT HAVE ANY IMPACT ON CALCULATION OF DEFERED TAX
agreed with mr shrikant
Dear ma'am,
Deffered tax is computed on d basis of timing difference between two laws. Accordingly, the dep charged to company as per the co act n as per the income tax act is need to concern. Suppose dep charged to the co as per the co act is more then it would be treated as deffered tax asset. If it is less then vice verse. The entry for DTA
Continued....
If it is less then it would be Deffered tax liability.
Entry for DTA
DTA a/c Dr
To profit n loss a/c
Entry for DTL
P n l A/c Dr
To DTL
In your case dep would be charged for d sold asset as per co act. N there won't be any dep under the income tax act for d same. Therefore need not concern about wdv while arriving DTA/DTL computation. Once u get d Difference amount on dep u need to charge 30% plus cess plus surcharge(if applicable) to arraive DTA/ DTL.
Eg: Dep as per co act = 100L
Dep as per income tax act = 80L
20L
DTA would be 20*.309= 6.18L
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