Deffred tax

Others 1405 views 2 replies
Hi Friends,

       can anbody tell me  about deffred tax in detail.what is the accounting treatment and how the benefits of deffred tax liability is calculated.           plz its urgent

  Thanks in advance .please

Replies (2)
Deferred tax concepts basically arises because as per Income tax or Mat w.e. tax is higher should be your tax liability then in your finiancials amount of tax provision will be as per the above which is not companies actual tax liability and earning per share is fluctating every year. So to remove this hurdle this concept is introduced by the ICAI. Simplest method to calculate is Balance Sheet Approach: Net Block as per Co. Act **** Less: Net Block as per IT Act **** Net Deferred Liability ***** Less: Unabsorbed Depreciation**** Less Other Timing Difference ***** Net Deferred Liability ***** Apply Rate of coming F.Y. Total Deferred Tax Liability as on the Date
Deferred taxes arises due to difference in the way certian items are treated in financials as per the companies act and as per IT Act. The idea behind bringing deferred taxes into books of accounts is on the basis of "matching concept" of accounting .
The income tax charge shall match the incomes disclosed in the books of accounts irrespective of time when it is payable as per IT laws.
For Eg: Depreaciation as per Schedule XIV is different from the IT Act . Former is normally lower and later is higher . Due to this the profit as per p&l as per co's act and IT Act willn't match as profit is higher as per P&l and lower as per IT p&l . Hence Deferred tax liability is brought into the books as this is only a timing difference by debiting the Profit and loss account and crediting deferred tax liability a/c

This explanation is only a tip of the iceberg. Please refer AS 22 for better understanding.

Regards
Prashanth


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
Featured 27 May 2026
Lead Conversion Executive / Sales Closing Executive

SMJ global advisors pvt ltd

New Delhi

B.Com

View Details
Company
01 June 2026
Audit, Taxation & Compliance Executive

R P S K & Associates

Nashik

CA Inter

View Details
Company
26 May 2026
Audit executive

vdsr & co LLP

Chennai

CA Inter

View Details
Company
24 May 2026
Accounts & Tax Executive

PARAS KHURANA AND CO

New Delhi

B.Com

View Details
Company
10 June 2026
Senior Account Executive

JDS Advisory LLP

Ahmedabad

CA Inter

View Details
Company
26 May 2026
Senior Accountant cum purchase Manager

Vardhaman Group of India

Pimpri Chinchwad

CA Inter

View Details
Company
Featured 28 May 2026
SEMI QUALIFIED/ CA DROPOUTS/ ARTICLES

T R SOOD & CO

New Delhi

CA Inter

View Details
Company
22 May 2026
Sr. Financial Analyst - Consolidation

Search Synergy

Mumbai

CA

View Details