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Hi All Can any one send me the format to calculate the deferred tax?
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Deferred Tax Assets
Carried forward unabsorbed Loss XX
Deferred Tax Assets (A) XX*30.9%
Deferred Tax Liability
Difference of book value of assets and WDV as per Income Tax Act
WDV As per Books a
WDV As per Income Tax b
Deferred Tax Liability (B) (a-b)*30.9%

Net Deferred Tax Asset A-B
The tax liability is calculated by adjusting the accounting income as per income tax laws. For example income (profit before tax) of ABC Ltd. is Rs. 10 Lac. So to calculate income tax on this income, the income is adjusted for various adjustments like disallowance of some expenses as per IT law.
Deferred tax is difference in tax liability calculated for temporary difference between the profit as per income tax and profit as per accounting. The temporary difference can either be a tax liability to be met in future (save tax now, pay tax later), or a tax asset (pay tax now and save tax later).
Deferred Tax assets:
When the accounting income is less than the taxable income deferred tax asset is created. It is the tax difference which we are paying now based on taxable income, whereas our accounting income is less. For example accounting income is Rs. 20 Lac and taxable income is Rs. 25 Lac. Then we have to pay extra tax on Rs. 5 Lac. Suppose the tax rates are 30% and we paid Rs. 1.5 Lac extra on Rs. 5 Lac. This extra tax is our deferred tax asset which is result of temporary differences which will be revered in subsequent years.
Deferred Tax Liability:
When the accounting income is more than the taxable income deferred tax liability is created. It is the tax difference which we are saving now since we had to pay more but we are paying less on taxable income. For example accounting income is Rs. 20 Lac and taxable income is Rs. 15 Lac. According to accounting income tax is Rs. 6 Lac and Rs. 4.5 Lac on taxable income. Since we are only paying Rs. 4.5 Lac, we are saving Rs. 1.5 Lac. But this is due to temporary difference which will be reversed in subsequent years. So this is our liability.
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