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Deffered tax is reversed in case of loss?

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deffered tax created in the previous year and is reversed in case of loss during the current period?
Replies (1)

Deffered tax is not calculated on basis of current profit / loss of a company.

Deffered tax is calculated on basis of timing differences, due to which company will have to pay more / less income tax in future due to transaction undertaken in current period.

One such eg of timing difference is depreciation as per companies act and depreciation as per income tax act.

Hence, in your case you will have to assess whether there is deffered tax asset / liability in current year and accordingly treat the same. You cannot simply reverse it in current year just because there is loss in company in current year. 


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