Disclosure

Statement of profit and loss:

Under AS 22, there is no specific requirement to disclose current tax and deferred tax in the statement of profit and loss. However, under company law requirements, the amount of Indian income tax and other Indian taxation on profits, including, wherever practicable, with Indian income tax any taxation imposed elsewhere to the extent of the relief, if any, from Indian income tax and distinguishing, wherever practicable, between income tax and other taxation should be disclosed.

AS 22 does not require any reconciliation between accounting profit and the tax expense.

Balance sheet:

The break-up of deferred tax assets and deferred tax liabilities into major components of the respective balance should be disclosed in the notes to accounts.

Deferred tax assets and liabilities should be distinguished from assets and liabilities representing current tax for the period. Deferred tax assets and liabilities should be disclosed under a separate heading in the balance sheet of the enterprise, separately from current assets and current liabilities. The break-up of deferred tax assets and deferred tax liabilities into major components of the respective balances should be disclosed in the notes to accounts.

The nature of the evidence supporting the recognition of deferred tax assets should be disclosed, if an enterprise has unabsorbed depreciation or carry forward of losses under tax laws.

An enterprise should offset assets and liabilities representing current tax if the enterprise:

  • Has a legally enforceable right to set off the recognised amounts and
  • Intends to settle the asset and the liability on a net basis. An enterprise should offset deferred tax assets and deferred tax liabilities if:
  • The enterprise has a legally enforceable right to set off assets against liabilities representing current tax; and

The deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governing taxation laws.

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