Rajat Agrawal (Practising Company Secretary) 30 August 2012
How to calculate deferred tax liability? I'm writing an audit report of a company and the books of accounts submitted by the client are in as per Companies Act and I need to calculate tax liability as per Income-tax Act, so how to calculate Deferred Tax liability? Please help me.
Riddhi Bhuva (Article Student CA Final) 30 August 2012
1) 1st calculate total depreciation as per companies Act.
2) calculate total depreciation as per IT Act.
3) Excess Depreciation as per IT Act i.e. (2) - (1)
4) Deferred Tax Liability = (3) * 30.9%
The above Deferred Tax Liabilty is only provision should be made during the year
In the above amount Add Opening balance of Deferred Tax Liability and you will get closing Balance of Deferred Tax Liabilty