IPCC RTP – Last 7 Attempts

Meaning:

Deferred Taxes arise due to temporary timing differences between accounting income and taxable income — meaning some revenues or expenses are recognized in different periods for accounting vs. tax purposes.

💰 Deferred Tax Asset (DTA):

A Deferred Tax Asset represents future tax benefits — when the company has paid more tax now but will pay less in future.

Example:

If accounting depreciation is higher than tax depreciation → taxable income is higher now → extra tax paid → creates a DTA.

🧮 DTA = (Tax Base – Carrying Value) × Tax Rate

💸 Deferred Tax Liability (DTL):

A Deferred Tax Liability represents future tax payable — when the company pays less tax now but will pay more later.

Example:

If tax depreciation is higher than accounting depreciation → taxable income is lower now → tax deferred → creates a DTL.

🧮 DTL = (Carrying Value – Tax Base) × Tax Rate

Why It Matters:

✅ Ensures compliance with Ind AS 12 / IAS 12

✅ Affects future profitability & cash flow forecasting

✅ Important for valuation, consolidation, and budgeting (FP&A / MIS)

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