[Illustrative Checklist] Disclosure requirements under Ind AS 12 | Income Taxes

The objective of Ind AS 12, Income Taxes, is to prescribe the accounting treatment for income taxes. The principal issue in accounting for income taxes is how to account for the current and future tax consequences of:

(a) the future recovery (settlement) of the carrying amount of assets (liabilities) that are recognized in an entity’s balance sheet; and

(b) transactions and other events of the current period that are recognized in an entity’s financial statements.

This Standard requires an entity to recognize a deferred tax liability (deferred tax asset), with certain limited exceptions. Moreover, it also requires an entity to account for the tax consequences of transactions and other events in the same way that it accounts for the transactions and other events themselves.

As per the requirement of this Ind AS, an entity is required to follow the below-mentioned disclosure requirements:

• Whether the entity has offset the current tax assets and current tax liabilities only in case where the entity:

(a) has a legally enforceable right to set off the recognized amounts; and

(b) intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously

• Whether the entity has offset deferred tax assets and deferred tax liabilities only in case where the below-mentioned conditions are fulfilled:

(a) the entity has a legally enforceable right to set off current tax assets against current tax liabilities; and

(b) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:

(i) the same taxable entity; or

(ii) different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered

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