Deferred Tax Asset and Liability explanation

According to definition, if Current Tax > Tax Expenses, then it is called Deffered Tax Assets

and if Current Tax < Tax Expenses, then it is called Deferred Tax Liability

So, how if Current Tax is more than Tax Expenses it is called an 'Assets'

and how if Current Tax is less than Tax Expenses it is called a 'Liability'

Please explain...

Replies (2)
Quick Summary
This discussion clarifies the concepts of deferred tax assets (DTAs) and deferred tax liabilities (DTLs). DTAs arise when current tax paid is less than the tax expense, essentially representing future tax benefits. Conversely, DTLs occur when current tax paid exceeds the tax expense, indicating future tax obligations. While both are related to temporary differences, such as those from depreciation rates, entities typically present the net balance of DTAs and DTLs on their balance sheet.

Deferred tax assets is current assets and deferred tax liability is current liabilities but entity should show the net balance of DTA and DTL in balance sheet
When Income Tax libility as per book's of Accounts is more than Income Tax act due to i.e rate of depreciation , then for temporary difference we have to create Deferred Tax liability .
when Income Tax libility as per book's of Accounts is less than Income Tax act due i.e rate of depreciation , then for temporary difference we have to create Deferred Tax Asset.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
09 September 2026
SENIOR AUDITOR & ACCOUNTS MANAGER

Anupam Parashar & Co.

Ghaziabad

CA Final

View Details
Company
15 September 2026
Client-site CA associate

Aditya Muley and Co

Mumbai

CA

View Details
Company
28 August 2026
Audit Manager

K A R M & CO

Mumbai

CMA

View Details
Company
09 September 2026
Semi Qualified CA / CA Inter - 2 Groups Cleared

Getmyca Consultant Pvt Ltd

New Delhi

CA Inter

View Details
Company
Featured 12 September 2026
Assistant Manager - Finance & Compliance

Naveen Fintech Pvt Ltd

Kolkata

CA Inter

View Details
Company
ARTICLESHIP 18 September 2026
Industrial Trainee

Twenty Point Nine Five Ventures Private Limited

Noida

CA Inter

View Details
Company
ARTICLESHIP 07 September 2026
CA Articles

Kothari Jain Patil & Chartered Accountants

Pune

CA Inter

View Details
Company
ARTICLESHIP 29 August 2026
Article Assistant

RRPM & ASSOCIATES LLP

Chennai

CA Inter

View Details