All You Need to Know About Deferred Tax Asset & Deferred Tax Liability

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Balance Sheet Factors	Amount
Income/Revenue	₹1,00,000
Taxable income	₹98,000
Warranty claim expenses	₹2000
Tax payable (at 20%)	₹19,600

Balance Sheet Factors	Amount
Income/Revenue	₹1,00,000
Taxable income	₹1,00,000
Warranty claim expenses	Nil
Tax payable (at 20%)	₹20,000

Accounting Factors	Amount
Revenue for three years	30% of ₹70,000= ₹21000
Decrease in annual income	₹21000- ₹9000= ₹12000
Tax liability	30% of ₹12000= ₹3,600

Specifications	Difference (Book-Tax)	DTA/DTL
Income	₹2,00,000 (₹10,00,000-₹8,00,000)	-
Reduction	₹1,00,000 (₹2,00,000-₹1,00,000)	₹30,000 (30% of ₹1,00,000)
Payable sales tax	₹50,000 (₹50,000- ₹0)	₹15,000 (30% of ₹50,000)
Leave encashment	₹1,00,000 (₹2,00,000- ₹1,00,000)	₹30,000 (30% of ₹1,00,000)
DTA/DTL (closing balance)	-	₹15,000

What is Deferred Tax - Assets And Liabilities

What Is Deferred Tax?

What Is a Deferred Tax Asset?

What Is Deferred Tax Liability?

Example of Deferred Tax Assets and Liabilities

Balance Sheet of a Company

Income Tax Statement of the Same Company

Illustration on the Calculation of Deferred Tax Asset And Deferred Tax Liability

How Does DTA/ DTL Affect Tax Holidays?

What Is the Effect of Deferred Tax Asset And Deferred Tax Liability on MAT?

Frequently Asked Questions

✓ Does a company show higher tax paid when there is a creation of Deferred Tax Asset?

✓ Can continuous losses from business operations cause an increase in Deferred Tax Asset?

More article about Income Tax in India

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