Guide for computing Deferred Tax as per AS-22 "Accounting for taxes on income" Deferred Tax

Deferred Tax Liability

Deferred Tax Asset

Created when the income as per accounting records is less than the income as per the tax laws

Created when the income as per accounting records is more than the income as per the tax laws

Eg: Depn as per books - 100,000 depn as per IT act - 150,000 - create DTL on the timing difference of Rs.50,000 Entry:Deferred Tax Liability a/c Dr To P&L a/c (Being DTL created for adjusting timing differences in the books as per AS-22)

Eg: Depn as per books - 200,000 depn as per IT act - 150,000 - create DTA on the timing difference of Rs.50,000

P&L A/c Dr To Deferred Tax Asset a/c (Being DTA created for adjusting timing differences in the books as per AS-22)

Guide for computing tax under MAT 1. Compute tax under normal income 2. Arrive book profit as specified u/s 115 JB viz.,

--> keep net profit as per p&l a/c as the starting point --> deduct the least of the following * unabsorbed loss as per books of the previous AY * unabsorbed depn as per books of the previous AY * unabsorbed cash loss as per books of the previous AY ( which is arrived as Loss as per P&L a/c (-) Una

3. The resultant figure is adjusted book profit. Compute MAT on this at the rate applicable for the relevant AY as sta

4. Higher of the tax computed under normal provisions and tax computed u/s 115 JB shall be taken to the tax payab From this, deduct prepaid taxes and the balance shall be the final tax payable for the AY

Loss as per P&L a/c (-) Unabsorbed depn )

ble for the relevant AY as stated u/s 115 JB

all be taken to the tax payable for the given AY.