Meaning of term deferred tax under Indian Tax

Posted on 22 April 2023 Category : Indian Tax Terms

What is deferred tax under Indian Tax

Deferred Tax

The details about term deferred tax under Indian tax are explained here

Deferred Tax is an asset or liability arises due to timing differences of payment of income tax.

In many cases the deferred tax outcome will be similar for a temporary difference or timing difference approach. However, differences can arise such as in relation to revaluation of fixed assets qualifying for tax depreciation, which gives rise to a deferred tax asset under a balance sheet approach, but in general should have no impact under a timing difference approach.

An asset that may be used to reduce any subsequent period's income tax expense. Deferred tax assets can arise due to net loss carry-overs, which are only recorded as asset if it is deemed more likely than not that the asset will be used in future fiscal periods.

Temporary differences are differences between the carrying amount of an asset or liability recognized in the statements of financial position and the amount attributed to that asset or liability for tax or reductible temporary differences, which are temporary differences that will result in deductible amounts in determining taxable profit (tax loss) of future periods when the carrying amount of the asset or liability is recovered or settled.

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