i want to know about
1.deferred tax liability apart from the defination that it is the difference between book depreciation and tax depreciation. and also where it will appear in balance sheet as per revised schedule.
2. to which type of companies depreciation rates as per companies law is applicable.
Deferred tax liability arises when your taxable income is less than your accounting income due to timing difference.
Deferred tax liability / asset is shown under non current liability / non current asset as per revised schedule vi
-A deferred Tax Liability or an Def.Tax asset arises due to the differences in profits as shown in P&L A/c as per IT Act and PL A/c as per companies Act.
-Nothing but due to disputes between IT Act and Companies Act.
Eg.
-DIff in rates of Depreciaiton
-Cash payments exceeding 20,000. They are charged under Co's act, but under IT act, they are disallowable.
--- w.e.f. 01-04-2006, this has been made applicable to every companyregistered under Companies Act
Deferred tax liability arises when your taxable income is less than your accounting income due to timing difference.
Deferred tax liability / asset is shown under non current liability / non current asset as per revised schedule vi
Hii,
Depreciation as per Company Law is to be calculated and accounted for accountancy purpose.
And Depreciation as per IT Act is to be calculated to prepare IT Return of the company.
I mean Depreciation as per company law is applicable to all companies.
YES ,RIGHT SAID ABOVE...
could someone give a practical example wrt deferred tax that usually occurs at the time of finalization?
actual working shall be great, if uploaded.
All the compny registered under compnies Act, 1956 have to follow the Depreciation Rates prescribed in the company Law.
Examples are from Page No. 41 in the attached file......
Can Deferred tax Liability Be a Debit Balance?
ALL THE COMPANIES REGISTERED UNDER COMPANIES ACT 1956 HAVE TO PROVIDE DEPRECIATION AS PER SCHEDULE 14 OF CO. ACT.
DEFERRED TAX LIA/ASSEST ARISES DUE TO TIMING DIFFERENCE. THESE DIFFERENCES ARISE DUE TO DIFERRENT PROVISIONS IN BOTH THE ACT FOR THE SAME MATTER.
ITS NOT THAT DEBIT BALANCE OF DEFERRED TAX LIABILITY IS DEFERRED TAX ASSET RATHER IT CAN ALSO BE REVERSAL OF DEFERRED TAX LIABILITY.
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