Differentiate deferred tax under companies act and income tax.
some year tax amount is less from net profit but sometimes add with net profit. what is the provision!
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Deferred tax
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Deferred tax is to be calculated on expenses having timing difference for charge off in companies act and income tax act.
For example, depreciation rates are different in both act and therefore deferred tax will be calculated @ of applicable tax rate (presently 30% in case of domestic companies) on the difference between both the depreciation.
sir..can u give a example
take an example rate of depreciation for furniture is 25.89% on W.D.V method as per Companies Act and 10% as per Income Tax Act , so when there is a difference is rates book profit and accounting profit will differ leading to creation of a provision for the same purpose called 'Deffered Tax '
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