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Deferred tax calculator — Ind AS 12 FY 2025-26 & 2026-27

Ind AS 12 works from the balance sheet: compare each asset and liability with its tax base, and tax the difference. List the items, enter the carrying amount and the tax base, and say whether each one goes through profit or loss or OCI. You get the deferred tax asset and liability, the amount that passes the recognition test, and the year’s movement split between P&L and OCI.

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Tax rate

The rate expected to apply when the differences reverse — enacted or substantively enacted at the reporting date

Or enter the rate (%)

Items — carrying amount and tax base

Enter liabilities as positive figures. For an unused tax loss or credit, enter the amount under carrying amount. Opening balance: a deferred tax asset as a positive figure, a liability as a negative one. Leave the item rate blank to use the main rate; fill it where a different rate applies, such as capital gains.

Item	Type	Carrying amount (₹)	Tax base (₹)	Item rate (%)	Goes to	Opening DTA / (DTL) (₹)






			—

Recognition test and presentation

Will the taxable differences reverse in time to absorb the deductible ones?

Future taxable profit judged probable, before those reversals (₹)

From approved forecasts or tax planning. Enter 0 if there is a history of recent losses and no convincing other evidence.

Balance sheet presentation

Reporting under the older standards instead? Use the AS 22 deferred tax calculator. For the tax base of fixed assets, build the block-wise WDV in the income tax depreciation calculator.

How deferred tax is computed under Ind AS 12 — FY 2025-26 and FY 2026-27

Ind AS 12 starts from the balance sheet. For every asset and liability, compare the carrying amount in the financial statements with its tax base — the amount attributed to it for tax purposes. For an asset, the tax base is what will be deductible against the taxable income generated when the asset is recovered. For a liability, it is the carrying amount less whatever will be deductible in future. The gap is a temporary difference. This is the main contrast with AS 22, which starts from the profit and loss account and looks at timing differences between accounting income and taxable income.

The direction decides whether it is an asset or a liability. An asset carried above its tax base, or a liability carried below it, is a taxable temporary difference and gives a deferred tax liability: plant with a book value of ₹1 crore and a tax written down value of ₹85 lakh is the standard case. An asset carried below its tax base, or a liability carried above it, is a deductible temporary difference and gives a deferred tax asset: a gratuity provision that is deductible only on payment has a carrying amount but a tax base of nil. Unused tax losses and credits also give a deferred tax asset.

Deferred tax liabilities are recognised in full, apart from a few exceptions such as the initial recognition of goodwill. Deferred tax assets are recognised only to the extent it is probable that taxable profit will be available to use them. The standard points to three sources: taxable temporary differences of the same entity and tax authority that reverse in the same period, future taxable profits, and tax planning opportunities. Where the entity has a history of recent losses, an asset for unused losses needs convincing other evidence. The test is repeated at every reporting date, for recognised and unrecognised assets alike.

Measurement uses the tax rates enacted or substantively enacted by the reporting date that are expected to apply when the difference reverses, and reflects the way the entity expects to recover the asset — through use or through sale. For a company in the 22% regime under Section 115BAA of the Income-tax Act, 1961, the rate is 25.168% with surcharge and cess. Deferred tax is not discounted.

The movement for the year follows the item that gave rise to it. Deferred tax on depreciation or a provision goes to profit or loss. Deferred tax on something recognised in other comprehensive income — remeasurement of a defined benefit plan, equity instruments at fair value through OCI, a cash flow hedge — goes to OCI, and deferred tax on an item taken directly to equity goes to equity. The calculator takes an opening balance per item and reports the charge or credit by destination.

Worked example for 31 March 2026 — three items at 25.168%

A company in the 22% regime has plant carried at ₹1,00,00,000 with a tax WDV of ₹85,00,000, a gratuity provision of ₹5,00,000 deductible on payment, and listed equity investments at FVOCI carried at ₹12,00,000 against a cost of ₹10,00,000. Opening balances: deferred tax liability of ₹3,20,000 on plant, asset of ₹1,00,000 on gratuity, liability of ₹14,300 on the investments.

Inputs

Plant — taxable difference₹15,00,000 × 25.168% = DTL ₹3,77,520

Gratuity — deductible difference₹5,00,000 × 25.168% = DTA ₹1,25,840

Investments — taxable difference₹2,00,000 × 14.3% (long-term capital gains rate) = DTL ₹28,600

Output

Closing net deferred tax liability₹3,77,520 + ₹28,600 − ₹1,25,840 = ₹2,80,280

Opening net deferred tax liability₹2,34,300

Charge to profit or loss₹57,520 (plant) − ₹25,840 (gratuity) = ₹31,680

Charge to OCI₹28,600 − ₹14,300 = ₹14,300

The two charges add up to ₹45,980, which is the movement in the net liability. The gratuity asset is recognised in full because the reversing plant difference is more than enough to absorb it. The investments use the capital gains rate rather than the business rate because the carrying amount will be recovered through sale.

Common mistakes

Carrying the AS 22 working into Ind AS

A profit and loss reconciliation misses differences that never passed through profit or loss: fair value gains in OCI, revaluations, business combination adjustments, the equity component of a compound instrument. Rebuild the working from the balance sheet.

Getting the sign wrong on liabilities

For a liability, a carrying amount above the tax base is a deductible difference and a deferred tax asset — the mirror image of an asset. A provision allowed only on payment has a tax base of nil.

Recognising a deferred tax asset on losses from forecasts alone

A history of recent losses is strong evidence that future profit may not be available. Ind AS 12 then asks for sufficient taxable temporary differences or convincing other evidence, and requires the evidence to be disclosed.

Using one rate for everything

The rate follows the manner of recovery. Land or investments to be recovered through sale may attract the capital gains rate, not the business rate. Use the item rate column for those.

Putting OCI-related deferred tax through profit or loss

Deferred tax follows the underlying item. Tax on actuarial remeasurements and on FVOCI fair value changes belongs in OCI, and getting it wrong misstates both the tax expense and the effective rate reconciliation.

Netting the right-of-use asset and the lease liability and recognising nothing

Since the 2023 amendment to Ind AS 12, the initial recognition exemption does not apply to a transaction that gives rise to equal taxable and deductible differences. A lessee recognises a deferred tax liability on the right-of-use asset and a deferred tax asset on the lease liability, and the two diverge after day one.

Offsetting without the right to do so

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to set off current tax assets against current tax liabilities and they relate to the same tax authority and the same taxable entity. Balances of different group companies are not netted in consolidated statements.

Not remeasuring after a change in regime or rate

A move into the 22% regime, or an enacted change in rate, requires opening balances to be remeasured, with the effect going to profit or loss except where the balance originally arose in OCI or equity.

Frequently asked questions

How is deferred tax calculated under Ind AS 12?+

Temporary difference multiplied by the tax rate. For each asset and liability, deduct the tax base from the carrying amount to get the temporary difference, and multiply it by the tax rate expected to apply when the difference reverses. Taxable differences give a deferred tax liability and deductible differences a deferred tax asset, which is recognised only to the extent future taxable profit is probable.

What is the tax base?+

The amount attributed to an asset or liability for tax purposes. For plant it is the tax written down value. For a provision deductible on payment it is nil. For an item on which the tax treatment matches the books, the tax base equals the carrying amount and there is no temporary difference.

What is the difference between Ind AS 12 and AS 22?+

Ind AS 12 uses the balance-sheet approach and temporary differences; AS 22 uses the income-statement approach and timing differences. Ind AS 12 therefore captures differences that arise outside profit or loss. The recognition bar for deferred tax assets also differs: probable future taxable profit under Ind AS 12, against reasonable certainty — and virtual certainty for losses — under AS 22.

When can a deferred tax asset be recognised?+

To the extent it is probable that taxable profit will be available against which the deductible difference or unused loss can be used. Reversing taxable temporary differences, forecast taxable profits and tax planning opportunities all count. With a history of recent losses, convincing other evidence is needed.

Which tax rate should be used for deferred tax in FY 2025-26 and FY 2026-27?+

For a domestic company in the 22% regime, 25.168% in both years. The rule is to use the rate enacted or substantively enacted by the end of the reporting period that is expected to apply when the asset is realised or the liability settled. Under Section 115BAA of the Income-tax Act, 1961 that is 22% plus 10% surcharge and 4% cess, and the Income-tax Act, 2025 carries the same regime forward from tax year 2026-27.

Does deferred tax go to profit or loss or OCI?+

It follows the transaction. If the item that created the difference was recognised in profit or loss, so is the deferred tax. If the item was recognised in other comprehensive income or directly in equity, the deferred tax goes there too.

Is deferred tax discounted?+

No. Ind AS 12 does not permit deferred tax assets and liabilities to be discounted.

Is deferred tax current or non-current?+

Non-current. Under Division II of Schedule III, deferred tax assets (net) and deferred tax liabilities (net) are presented under non-current assets and non-current liabilities.

How is MAT credit treated under Ind AS 12 in 2026?+

As a deferred tax asset, and it needs a fresh look this year. MAT credit entitlement is treated as a deferred tax asset under Ind AS 12, recognised to the extent it is probable that it will be used. The Finance Act 2026 changed the MAT framework from tax year 2026-27 — no new credit arises for companies that stay outside the concessional regime, and existing credit can be used only after moving into it, subject to a cap — so any MAT credit asset should be reassessed against the company’s regime plans.

What must be disclosed?+

The major components of tax expense, the tax relating to OCI items, a reconciliation between tax expense and accounting profit multiplied by the applicable rate, the deferred tax balance and movement for each type of temporary difference, and the amount and expiry of deductible differences and losses for which no deferred tax asset is recognised.

Authoritative sources

MCA

Ind AS 12 — Income Taxes (Companies (Indian Accounting Standards) Rules, 2015) — Tax base and temporary differences (paragraphs 5 to 11), recognition of deferred tax liabilities and assets (15 to 37), measurement (46 to 56), profit or loss versus OCI (58 to 65), presentation and disclosure (71 to 88).

MCA

Companies (Indian Accounting Standards) Amendment Rules, 2023 — Effective 1 April 2023. Narrowed the initial recognition exemption so that it no longer covers transactions giving rise to equal taxable and deductible temporary differences, such as leases.

MCA

Schedule III, Division II — Companies Act, 2013 — Presentation of deferred tax assets (net) and deferred tax liabilities (net) as non-current items.

CBDT

Income-tax Act, 1961 — Section 115BAA — The 22% concessional rate for domestic companies, which with 10% surcharge and 4% cess gives the 25.168% rate commonly used to measure deferred tax.

Always confirm against the latest version of the source. Regulations evolve and amendments are common.

Related calculators

Deferred tax calculator (AS 22) →Income tax depreciation calculator →Depreciation: Companies Act vs Income Tax →Ind AS 116 lease calculator →ECL calculator (Ind AS 109) →Ind AS applicability calculator →

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Last reviewed: 2026-10-01 · For informational purposes only — not professional advice.