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DTL.....................

kaushal (w) (545 Points)

14 June 2008

deferred tax liablity to be calculated on clg wdv of assets of last year and deducted from profits if DTL is created for first time .

my question is so how to calculate DTL from second year . on clg bal of wdv of assets or on depritiation amount creating timing difference .?????????????????

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5 Replies

rajesh (Manager - Accounts & Commercial) (57 Points)
Replied 14 June 2008

we are the manufacturer and exporter, please advise whether TDS applicable on Air freight charges paid to forwarder.

Thanks

Ashish Goyal (Service) (156 Points)
Replied 15 June 2008

DTL/DTA is always computed on the Timing Differences arising between Accounting Income and Taxable Income....

Be it first year or thereafter DTL/DTA will always be computed on difference between the Dep. as per books and Income Tax act which creates the difference in Book profit and Taxable Profit.

guru santhanam (Chartered Accountant) (97 Points)
Replied 15 June 2008

Hi Ashish / Kaushal,

If there is no sale of fixed asset happens in the year or past years, DTL/DTA calculated based on the Depreciation or WDV will provide us the same results.

But Accounting entries will be entirely different in the two cases. Pls refer to the attached excel sheet. Net effect of the entries under both made will be same. However, difference should be noted.

Now, suppose a sale of fixed asset happens, then under the Income Tax Depreciation sales proceeds would be deducted from the WDV.

But in Corporate Depreciation, WDV would be entirely knocked off from the schedule itself.

Under this circumstances, DTA/DTL calculated based on Depreciation alone and calculation based on WDV will significantly differ.

This difference is due to the treatment of sales proceeds in Income Tax Depreciation and knocking off the WDV of sold asset in Corporate Depreciation.

As for as my experience, it is ADVISABLE to calculate Depreciation based WDV Method to avoid confusion.

Regards,

gurusanthanam

Attached File : 8 dtl.xls downloaded: 351 times

CA.RAJIV SHUKLA FCA (Practicing Chartered Accountant) (346 Points)
Replied 05 August 2010

Dear Guru Ji,

I have clacuated DTA and DTL on WDV since 2006 now a learned person rejecting my veiws that i am wrong.

While he is a Advocate not a CA and nothing read in his class or carrier Pls reply to him on for WDV calcualtions on his email given under or cell no.9811236791 Mr. Ram Chandra Advocate

Pls sent these things to rccindia @ hotmail.com

as this person is not respecting CA's