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Ind AS 12, Income Taxes, Summary

Indian Accounting Standard (Ind AS) 12 Summary

Indian Accounting Standard (Ind AS) 12, Income Taxes are taxes based on taxable profits, and taxes that are payable by a subsidiary, associate or joint arrangement on distribution to investors.

Current tax is the amount of income taxes payable (recoverable) in respect of the taxable profit (loss) for a period.

Deferred tax is the amount of income taxes payable (recoverable) in future periods as a result of past transactions or events.

Deferred tax is recognised for the estimated future tax effects of temporary differences, unused tax losses carried forward and unused tax credits carried forward.

A deferred tax liability is not recognised if it arises from the initial recognition of goodwill.

A deferred tax asset or liability is not recognised if:

– It arises from the initial recognition of an asset or liability in a transaction that is not a business combination, and

– At the time of the transaction, it affects neither accounting profit nor taxable profit.

Deferred tax liability is not recognised in respect of temporary differences associated with investments in subsidiaries, branches and associates and joint arrangements if certain conditions are met. (For example, in the case the investor is able to control the timing of the reversal of the temporary differences, and it is probable that the temporary difference will not reverse in the foreseeable future).

A deferred tax asset is recognised to the extent that it is probable that it will be realised.

Current and deferred taxes are measured based on rates that are enacted or substantively enacted at the reporting date.

Deferred tax is measured based on the expected manner of settlement (liability) or recovery (asset).

Deferred tax is not discounted.

The total income tax expense (income) recognised in a period is the sum of current tax plus the change in deferred tax assets and liabilities during the period, excluding tax recognised outside profit or loss – i.e. in other comprehensive income or directly in equity – or arising from a business combination.

Income tax related to items recognised outside profit or loss is itself recognised outside profit or loss.

Deferred tax is classified as non-current in the balance sheet.

The entity offsets current tax assets and current tax liabilities only when it has a legally enforceable right to set off current tax assets against current tax liabilities, and it intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The entity offsets deferred tax assets and deferred tax liabilities only when it has a legally enforceable right to set off current tax assets against current tax liabilities, and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity, or different taxable entities that intend either to settle on a net basis or to realise the asset and settle the liability simultaneously.

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  1. Pingback:Quick Reference of All Ind-AS - CA Blog India

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