Deferred tax expense

Hello!!,

In case of Deferred Tax, there are two possibilities either it will be a deferred tax asset (DTA) or a Deferred Tax Liability (DTL).

Where Book profit is greater than Taxable profit, Deferred tax Liability is created:

Entry passed in the books of account in the case of DTL:

Profit and Loss Account --------Dr.

     To DTL A/c

(It is refleted in Profit and loss account Debit side and under Liabilities side in Balance Sheet as a separate entity)

For creating deferred tax liability in tally. Go to Accounts info - then create group- create deferred tax liabilities under current Liabilities- then go to ledger creation and created deferred tax Liability under Deferred Tax Liabilities group. Basically Deferred tax liability is below unsecured Loans.

Where Book Profit is less than Taxable profit, Deferred Tax Asset is created

Entry Passed in the books of Accounts:

Deferred tax asset A/c-------------Dr.

    To Profit and Loss Account

The system of creation in tally is same, as DTA is shown as a separate entity in the Balance sheet Below Investments. 

For a detailed explanation refer AS 22 (Accounting Standards)

Thanks!!