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Provision for income tax
What is the difference between provision
for tax and deferred tax?
Is there any
provision to setoff provision for tax
against deferredtax ?
Replies (2)
You would find huge discussions and articles on this topic,
I'm just referring to general concept in two lines:
Provision for tax is provision / a rough estimation made for tax expenses that would occur on a later date and on such date the actual amount of expense is known. while..
Provision for deferred tax is provision made to cover the tax liablilities that would emanate from the current financial year only but effect of the same would be seen only in succeeding financial years.
Provision for tax is amount that you need to pay to income tax dept.
But deferred tax is different, it is guided by AS-22. In simple language; it is tax calculated on difference of accounting income and taxable income. i.e. some accounting exp. are allowed as expense in income tax in later year or some expenses are allowed as whole; while in books we write it off for several years.
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