DTA and DTL

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KINDLY EXPLAIN ME MAENING OF DTA & DTL IN EASY WORDS.............

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CA Navin Jain

MANAGER (FINANCE & ACCOUNTS)

11768 Points Joined June 2008

DTA - DEFERRED TAX ASSETS:-

WHEN BOOK PROFIT IS RS. 100 AND PROFIT IS COME RS. 150 AS PER INCOME TAX AND COMPANY HAS TO PAY TAX OF RS. 45 ON PROFIT AS PER INCOME TAX , HENCE COMPANY HAS PAY TAX OF RS. 15 EXTRA ACCRODING TO BOOK PROFIT SO RS. 15 IS CALLED DEFERRED TAX ASSETS.

CA Rakesh Garg

Asst. MGR Taxation

510 Points Joined April 2009

Hello Dear,

Deffered tax arises due to different treatment of accounts, as per company act and as per income tax act.

we have to maintain our books as per company act but we calculate income tax as per income tax act. so there arise a difference in taxes on income. there r mainly two types of differences, 1) temprary difference 2) permanent difference. deffered tax asset or liablities are created for taken the effect of temprary diff. No treatment r available 4 permanent diff.

if we have paid more tax(amount as per income tax act) than the tax ( amt as per co. act) , it will be deffered tax asset and if we have paid less tax than tax as per co act, then it will be deffered tax liab.

yet any confusion remain, do reply

Parthsarthi Patel

98 Points Joined May 2009

To simplify, when Depre as per It is less than that of companies act, we are claiming less exp and paying high tax to the extent, creating benefit for future, i.e.DTA.