Critical Analysis of Accounting for Deferred Taxes A Study of The Dynamics of Effective Tax Rate Among Top Listed Companies In India

Abstract

Abstract: newlineThis paper provides an insight into the impact of the implementation of IFRS converged newlineIndian Accounting Standards (IND AS) in India on the Tax Expense accounted for by newlinestudying the average Effective Tax Rate (ETR) for a five-year block period before and newlinepost-implementation of IND AS. The study is on a sample list of top Indian Companies newlinelisted on the National Stock Exchange (NSE). Before the implementation of the IND AS, newlinethe Companies were required to follow the Indian GAAP Accounting Standards. IND AS newline12 Income Taxes uses the balance sheet approach whereas the AS 22 Accounting for newlineIncome Taxes followed a profit and loss account approach to determine the deferred tax. newlineExamining the impact of the change in the GAAP is important because Tax Expense newlinereduces the distributable profit that is available to the shareholders and brings down the newlineEPS. Our study finds that there is no significant impact because of the implementation of newlineIND AS in India. newlineKeywords: Deferred Tax; Effective tax rate (ETR); IFRS implementation; IND AS; newlineTemporary Differences newline