IND AS 12

IND AS 12: INCOME TAXES

(Corresponding to IAS 12)
OBJECTIVE
To prescribe the
♦ Accounting treatment for Income Taxes.
♦ Accounting for current & future tax
consequence
■ Of future recover (settlement) of carrying amount of assets (liabilities) that are recognised in an
entity's statement of financial position.
■ Of transactions & other events of current period that are recognised in entity's Financial Statement.

SCOPE
♦ Income Taxes include
■ Domestic & foreign taxes
■ Taxes which are payable by a subsidiary, associate or joint venture on distributions to the reporting
entity, such as withholding taxes.
♦ This standard does not deal with the methods of accounting for government grants or investment tax
credits. However, this standard deals with the accounting for temporary differences arising from such
grants or investment tax credits.

DEFINITIONS
(1) Deferred Tax Liability are amounts of income taxes payable in future periods in respect of taxable
temporary difference.
(2) Deferred Tax Assets are amounts of income tax recoverable in future periods in respect of :
(a) Deductible temporary difference
(b) Carry forward of unused tax losses
(c) Carry forward of unused tax
credits
(3) Temporary Difference are difference between carrying amount of asset/liability and its tax base.
(4) Taxable Temporary Difference will result in taxable amount in future when the carrying amount of an
asset is recovered or liability is settled.
(5) Deductible Temporary Difference will result in deductible amounts in future when the carrying
amount of an asset is recovered or liability is settled.
 CURRENT TAX
♦ Recognise Liability for unsettled portion of tax expense.
♦ Recognise an asset to the extent amounts paid exceeds amount due.
♦ The benefit relating to a tax loss that can be carried back to recover current tax of a previous period shall
be recognised as an asset.

TEMPORARY DIFFERENCE
For assets For liabilities
If Taxable temporary difference(TTD) Deductible temporary
Carrying amount - (minus) difference(DTD)
> Deferred tax liability(DTL) - (minus)
Tax base Deferred tax asset(DTA)

If Deductible temporary Taxable temporary difference(TTD)

Carrying amount difference(DTD) - (minus)
< - (minus) Deferred tax liability(DTL)
Tax base Deferred tax asset(DTA)
 DISCLOSURE
♦ The major components of tax expense (income) shall be disclosed separately.
♦ The aggregate current and deferred tax relating to items that are charged or credited directly to equity.
♦ The amount of income tax relating to each component of other comprehensive income.
♦ An explanation of the relationship between tax expense (income) and accounting profit by numerical
reconciliation according to the standard.
♦ The aggregate amount of temporary differences associated with investments in subsidiaries, branches
and associates and interests in joint ventures, for which deferred tax liabilities have not been recognised.
♦ The amount (and expiry date, if any) of deductible temporary differences, unused tax losses, and unused
tax credits for which no deferred tax asset is recognised in the balance sheet.
♦ The amount of income tax consequences of dividends to shareholders of the entity that were proposed or
declared before the financial statements were authorised for issue, but are not recognised as a liability in
the financial statements.

APPENDIX A: INCOME TAXES: CHANGES IN THE TAX STATUS OF AN ENTITY OR ITS

SHAREHOLDERS
( Corresponding to SIC 25)
ISSUE
♦ The issue is how an entity accounts for the tax consequences of a change in its tax status or that of its
shareholders.

♦ A change in the tax status of an entity or of its shareholders may have consequences for an entity by
increasing or decreasing its tax liabilities or assets. This may, for example, occur upon the public listing
of an entity's equity instruments or upon the restructuring of an entity's equity. It may also occur upon a
controlling shareholder's move to a foreign country. As a result of such an event, an entity may be taxed
differently; it may for example gain or lose tax incentives or become subject to a different rate of tax in
the future.
♦ A change in the tax status of an entity or its shareholders may have an immediate effect on the entity's
current tax liabilities or assets. The change may also increase or decrease the deferred tax liabilities and
assets recognised by the entity, depending on the effect the change in tax status has on the tax
consequences that will arise from recovering or settling the carrying amount of the entity's assets and
liabilities.

CONSENSUS
♦ A change in the tax status of an entity or its shareholders does not give rise to increase or decrease in
amounts recognised outside profit or loss.
♦ The current and deferred tax consequences of a change in tax status are included in net profit or loss for
the period, unless those consequences relate to transactions and events that result, in the same or a
different period, in a direct credit or charge to the recognised amount of equity or in amounts recognised
in other comprehensive income.
♦ Those tax consequences that relate to changes in the recognised amount of equity, in the same or a
different period (not included in net profit or loss), are charged or credited directly to equity.
♦ Those tax consequences that relate to amounts recognised in other comprehensive income are recognised
in other comprehensive income.