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Deferred tax in case of losses

Pras@nna (Student CA IPC / IPCC) (24 Points)

25 September 2015

Will deferred tax arraise, if the company is in losses (that the company is not having tax even as per MAT also) ?

Please clarify me as early as possible.

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5 Replies

CA Suri Kota (Assistant Manager @ EY) (955 Points)
Replied 25 September 2015

Hi,

Deferred tax has to be provided for irrespective of current year losses. It is calculated w.r.t to future period perspective. Even the carry forwrd losses should be considered for calculation.

Losses reflects the lower tax liability in future. Also the reason for providing deferred tax has got nothing to do with current year losses as we consider temp differences and others like Emp retirement benefits & Deprecitation.

Thanks,

Suri

1 Like

Miss Rinkal (Student) (1304 Points)
Replied 25 September 2015

I agree with CA Suri Kota completely

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Chiranjit Saha (Accountant) (22 Points)
Replied 27 September 2015

Please clarify what is deferred tax and why it shown in balancesheet

Akhil (Financial Analyst) (31 Points)
Replied 27 September 2015

Deferred taxes are to be provided only in case of timing differences between income tax act and normal accounts. For example - difference in the rate of depreciation would lead to timing difference of profit between income tax and accounts. So even if there are losses, if there is difference in losses as per income tax and as per accounts and if that difference is timing difference and not permanent difference then only differed tax will arise