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AS 22: Accounting for Taxes on Income

A professional application note for accounts teams: what the standard controls, where it appears in company accounting, how to apply it and what evidence reviewers expect. Animated notes with Play, Pause, Replay, English and Hindi voice options are included below.

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AS 22: Accounting for Taxes on Income: interactive explanation

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Professional scope: This is an implementation-oriented explanation for accountants, finance managers, controllers and reviewers responsible for company accounts.

1. What this standard controls

Current tax and deferred tax are recognised to reflect tax consequences of the current period and timing differences between accounting income and taxable income.

Current position: Included in the ICAI Accounting Standards framework, subject to entity applicability, notified rules and later amendments.

2. Where it appears in the real accounting world

01Year-end current-tax provision
02Depreciation and provision timing differences
03Carry-forward losses and unabsorbed depreciation
04Deferred-tax asset recoverability

3. Practical application workflow

  1. Prepare a bridge from accounting profit to taxable income for accounting purposes.
  2. Identify timing differences and reversal patterns.
  3. Measure current and deferred tax using applicable enacted or substantively enacted rates.
  4. Recognise deferred-tax assets with the required prudence.
  5. Reconcile tax expense, balances and disclosures.

4. Real-world application example

A provision is expensed in books now but allowed for tax only on payment. This creates a deductible timing difference. Recognition of the deferred-tax asset depends on the prudence and evidence requirements of AS 22.

5. Journal-entry and accounting record pattern

Current taxDr Current tax expense / Cr Current tax payable.
Deferred tax assetDr Deferred tax asset / Cr Deferred tax income, when recognition criteria are met.
Deferred tax liabilityDr Deferred tax expense / Cr Deferred tax liability.

Entry wording is illustrative. Actual accounts, tax effects, dimensions and narration depend on the entity’s chart of accounts and facts.

6. Month-end and year-end control file

Controls to operate

  • Accounting-to-tax timing-difference register.
  • Reversal schedule by item.
  • DTA recoverability evidence and forecast review.
  • Tax-rate and law-change check.
  • Reconciliation to return/provision working papers without turning the page into tax-filing guidance.

Common errors and red flags

  • Treating permanent differences as deferred tax.
  • Recognising DTA on losses without sufficient evidence.
  • No item-wise reversal schedule.
  • Using an outdated rate.
  • Netting balances without meeting presentation requirements.

7. Reviewer questions

  1. Is the difference timing or permanent?
  2. When will it reverse?
  3. What evidence supports DTA recognition?
  4. Are rates current and applicable?
  5. Does tax expense reconcile to current and deferred components?

Related standards: AS 5, AS 10, AS 15, AS 29

Authoritative reference:

Before approving a material conclusion, check the latest ICAI compendium, notified Companies (Accounting Standards) Rules, entity applicability and subsequent amendments.

ICAI Accounting Standards Compendium →
Companies (Accounting Standards) Rules and amendments →

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Professional note: This educational resource does not replace entity-specific analysis, the latest notified standard, law, regulation, audit judgment or professional advice.