1 Accounting Standard-22 Accounting For Taxes On Income Composed by CA, CS*, B Com, NCFM(CM) Prakash Somani

2 Objective Accounting treatment of Taxes on Income Recognition of difference between Taxable Income & Accounting Income

3 Scope Applied in Accounting for Taxes on Income Determination of DTL (Deferred Tax Liability)/DTA (Deferred tax Assets) in Financial Statements Domestic & Foreign taxes also included

4 Definition Accounting Income : as per Profit & Loss account before deducting Tax Taxable Income : Determination in accordance with the Tax Laws Tax Expenses : Current Tax +Deferred Tax Current Tax : Income Tax on Taxable Income Deferred Tax : Tax effect of Timing Difference Timing Difference : Diff. in Taxable & Accounting Income –Originate in one period –Capable of being Reversal subsequently

5 Recognition Tax expenses should be included in determination of Net Profit & Loss Tax effect of Timing differences are included in Profit & Loss and as DTA/DTL in Balance Sheet Permanent Differences do not effect in DTA/DTL Deferred tax should be recognized for all Timing Differences

6 Measurement Current Tax measured at the amount expected to be paid using applicable Tax rates DTA/DTL measured using tax rates enacted by Balance Sheet date DTA/DTL should not be Discounted at Present Value

7 Presentation & Disclosure Offset Assets and Liabilities representing Current Tax and DTA/DTL if enterprise have Legally enforceable Right DTA/DTL should be disclosed under the separate heading in Balance Sheet Major components of DTA/DTL should be disclosed in Notes to Accounts

8 Thanks You