Traveling to Ladakh in winter is a challenging affair, one which not only requires determination and strength to face temperatures as low as -25 Degree Celsius, but also fair amount of planning to ensure that you are not only able to survive near arctic conditions, but are also able to enjoy your trip.
Clothing
Jacket: You should ideally have a down jacket or parka, which is warm enough to withstand temperature as low as -20 Degree Celsius and a similar styled lower to go with it. If you aren’t able to find such a warm jacket or are unwilling to spend that much money, you can get a warm oversized jacket (make sure it is air proof) and wear a warm sweater, sweatshirt and warm inner underneath it to keep yourself warm. Carry at least couple of warm sweaters with you, so that you can add another layer if the need be or in case your sweater gets wet.
Lower: You can get your lower custom made for your requirement from any trekking equipment manufacturer eg. Carrabin Okhla (011-41611082, 9810002676, 9873780333, 9818889767) in Delhi (I got my lower made from there) or buy a good quality down feather one. Just make sure the material used to construct the lower is air and water resistant, and has enough filling to keep you reasonably warm. Below the warm lower, you should wear warm inner from the likes of Neva and a jeans or pajama, depending on how cold you feel.
Shoes: For shoes my recommendation would be for Quechua Forclaz 500, which I had used for my winter trip to Ladakh and I had found them to be warm enough for winter in Ladakh and they are also perfect for walking over wet or icy surfaces. If you do not wish to spend that much money, then at the very least, get army shoes or any other leather shoes which are ankle high. Do not wear trainers or sandals to Ladakh, if you value your feet and fingers!
Gloves: Pair of warm airproof gloves is a must for a winter trip to Ladakh and you can find many quilted gloves made of leather and textile at majority of camping stores. In Delhi you can also visit Yashwant Palace for really warm gloves. Always make sure to carry a spare pair, just in case you lose your gloves or if they get wet.
Cap: Buy a warm monkey cap, since it can not only protect your head from cold winds, but also your ears and neck.
Muffler: Not really essential, but a good thing to have nonetheless.
Socks: While it is a good idea to carry warm woolen socks, if your shoes are warm enough, you can get away by wearing one or two normal socks.
Apart from above, carry sufficient amount of inner wear and other cloths. Also you can buy cloths in Ladakh, since counterfeit Northface and similar jackets and lowers are available there easily, along with pashmina shawls.
Food
While food is easily available in Ladakh, most of it can be too bland for Indian travelers. Hence carrying something to spice up your food eg. your favorite ketchup, achar, namkeen etc. is a good idea. If you are a vegetarian, then carry cheese spread and make sure to eat it regularly to keep your protein and fat intake high, which will give you warmth and strength to survive. Alternatively you can think about carrying protein powder or protein bars to ensure that your strength does not diminish drastically, after a few days of exposure to winter in Ladakh.
Almonds, cashews, peanuts, chocolates etc. are also good snacks to carry and eat on regular basis to keep your energy high.
Special tip: Best food is at Neha Sweets in Leh Main Market and at the dhaba with large outdoor seating area in Karu.
Other essentials
Flasks: With temperature well below freezing, drinking cold water isn’t really an option. Hence it is best to carry flasks to keep the water warm and drinkable. Make sure you are carrying at least one or two liter of water per person and drinking it on a regular basis to avoid getting dehydrated.
Medicines: Carry Diamox if you aren’t allergic to sulfur drugs (helps reduce some of the symptoms of AMS) and medicines for headache, fever, stomach ache, cold and cough syrup. You can find more detailed list for medicines here, First Aid Travel kit.
Sunscreen lotion: UV rays at high altitude can be quite damaging to the skin, even during the harshest of winter, so don’t forget to carry a good quality sunscreen lotion eg. Lotus Herbal Sun Screen Lotion with rating of SPF30 or higher and apply it properly before going out in the sun.
UV sunglasses: As mentioned earlier, UV rays at high altitude can be quite damaging and this holds true for eyes as well. So having decent quality UV sunglasses (Fastrack ones are available for as little as Rs. 800) is quite essential, especially if you are traveling early in the season or during winter, when mountain passes have a lot of snow cover and sunlight reflecting from the snow can be even harsher!
Mustard oil: Mustard oil can be used for moisturizing skin, putting it in your hair and for lubricating insides of nostrils, which can become quite dry and painful due to dry and cold winds of Ladakh.
Toilet Paper: A must have for winter trip to Ladakh.
Documents and IDs: It is essential to carry at least one government issued identity card and couple of photocopies of it, since it is needed while applying forinner line permit and at certain places, to register at the check post. You should also carry your medical insurance card (if you have one), Map of Ladakh, your printed itinerary, hotel reservation slips (if you have prebooked), couple of copies of your flight ticket and list of important contacts (useful in case your mobile phone stops working).
Chargers for all the gadgets, cameras and mobile: Need I explain this?
Spare camera batteries: Extreme cold temperature of Ladakh can be pretty harsh on camera batteries. So make sure to carry at least one or spare ones with you all the time and if you find them getting drained quite easily, then put them inside your jacket to keep them warm and increase their life.
Car charger or battery bank: If you are an avid smart phone user and planning to log your route on your favorite GPS App, then make sure you are carrying car charger or a power bank with at least 4000-5000mAH capacity to keep your mobile phone running throughout the day.
3 socket Belkin Surge Protector: While it is a little large in size, 3 socket Belkin Surge Protector will not only keep your gadgets protected from power surges, but will also allow you to charge multiple devices simultaneously and at the same time, provide the crucial cable length to safely place your gadgets in rooms with idiotic power socket locations (sadly enough, many hotels have this).
Enough memory cards to last you the entire trip: Doesn’t matter if you are carrying a laptop or planning to burn CDs/DVDs at Leh, carry enough memory cards to cover your entire shooting duration in Ladakh. If needed, borrow from friends but don’t depend on laptop HDDs or worse still, virus infested cyber café computers to copy and save your photographs!
Torch: Not really needed if your mobile phone has one, but if in case it doesn’t, carry a small LED one.
Money: While my recommendation would be to carry enough cash you need, to avoid wasting time withdrawing cash, it may not be feasible for everyone. So please keep in mind that ATMs beyond Srinagar and Manali are only available in Kargil and Leh and they too are few with often long queues in front of them.
Mobile phone connectivity: Only post-paid mobile phone connections from other states work in Ladakh and even from these, only BSNL has presence beyond Leh. So unless you wish to be dependent upon STD booths, carry a BSNL/MTNL post-paid connection.
Big Thanks: Yogesh Sarkar
Source: http://www.bcmtouring.com/forum/articles-f20/list-things-carry-winter-trip-ladakh-t55359/
Saturday, September 13, 2014
Deferred Tax Entries
The word Deferred is derived from the word “Deferments” which means arranging for something to happen at a later date. Thus, deferred tax is the tax for those items which are accounted in Profit & Loss A/c but not accounted in taxable income which may be accounted in future taxable income & vice versa. The deferred tax may be a liability or assets as the case may be.
“As per AS 22,
Current tax is the amount of income tax determined to be payable (recoverable) in respect of the taxable income (tax loss) for a period.
Deferred tax is the tax effect of timing differences.
Timing differences are the differences between taxable income and accounting income for a period that originate in one period and are capable of reversal in one or more subsequent periods.
Permanent differences are the differences between taxable income and accounting income for a period that originate in one period and do not reverse subsequently.”
Deferred tax is brought into accounts to make the clear picture of current tax and future tax. If we take some advantage of Income Tax sections and pay less tax in current year, we may have to pay tax in future on that advantage being reverse. In the same way if we have to pay more tax by not allowing any expense in current year, it will be allowed in future and in that year tax will be reduced. So, we may get some benefit or loss on account of difference in book profit and taxable profit.
Expenses amortized in the books over a period of years but are allowed for tax purposes wholly in the first year. (e.g. substantial advertisement expenses to introduce a product, etc. treated as deferred revenue expenditure in the books). Expenses paid without deducting TDS will not be allowed for tax purpose and will be allowed after deducting TDS on that. Expenditure of the nature mentioned in section 43B (e.g. taxes, duty, cess, fees, etc.) accrued in the statement of profit and loss on mercantile basis but allowed for tax purposes in subsequent years on payment basis. If we make provision of bonus payable, provident fund contribution, Provision for staff leave encashment, etc. but do not pay before filing of return they are disallowed in that year but will be allowed in the year of payment. If we make part payment out of this before filing of return that amount actually paid will be allowed for tax purpose and the remaining amount will be allowed in the year of payment. This is called temporary timing difference. But if we pay cash above Rs.20000/- this expense will not be allowed for tax purpose any time. So this is permanent difference.
We should keep in mind that Deferred Tax Liability or Deferred Tax Assets are created only for temporary timing difference. For permanent difference it is not created as they are not going to be reversed.
The book entries of deferred tax is very simple. We have to create Deferred Tax liability A/c or Deferred Tax Asset A/c by debiting or crediting Profit & Loss A/c respectively.
The Deferred Tax is created at normal tax rate.
[1] Profit & Loss A/c Dr
To Deferred Tax Liability A/c
[2] Deferred Tax Asset A/c
To Profit & Loss A/c
Please, note that both the entries are not passed but only liability or asset is created for net amount of deferred tax.
If book profit is greater than taxable profit, create deferred tax liability.
If book profit is less than taxable profit, create deferred tax asset.
If there is loss in the books of accounts but profit as per income tax and the difference (e.g. disallowance of exp.) subject to adjustments in future, create deferred tax asset.
If there is profit in the books of accounts but loss as per income tax and carry forward of loss is allowed, (we have to pay MAT), create deferred tax liability.
Thus it is understood that, Deferred Tax Asset and Liability arising on account of timing differences and which are capable of reversal in subsequent periods are recognized using the tax rates and laws that have been enacted or substantively enacted as of Balance sheet date. Deferred Tax Asset is not recognized unless there is virtual certainty that sufficient future taxable income will be available which such deferred tax asset will be realized.
In other words, DTL is recognized for temporary differences that will result in taxable amount in future years, Whereas DTA is recognized for temporary differences that will result in deductible amounts in future years and for carry forwards. It is to be noted that DTA is created in case of certainty only.
Example to understand Deferred Tax concept.
But the calculation is more important. Let us take one simple example of Depreciation difference in books of accounts and taxable income.
Suppose, one company purchases a machine costing Rs. 300000/- on 1ST April. The salvage value is assumed at zero. The working life is assumed at 3 years. The company uses straight line method for depreciation in books of accounts but this machine is of that type which can be depreciated fully in the first year for tax purpose. Suppose tax rate is 30% for 3 years. For simplification profit before depreciation and tax is assumed Rs.500000/-.
YEAR
|
I
|
II
|
III
|
PROFIT BEFORE DEPRECIATION AND TAXES
|
500000.00
|
500000.00
|
500000.00
|
DEPRECIATION IN BOOKS OF ACCOUNTS
|
100000.00
|
100000.00
|
100000.00
|
PROFIT BEFORE TAXES
|
400000.00
|
400000.00
|
400000.00
|
TAXABLE INCOME
=PROFIT - ALLOWABLE DEPRECIATION (500000-300000, 500000-0, 500000-0) |
200000.00
|
500000.00
|
500000.00
|
CURRENT TAX @ 30 % ON TAXABLE INCOME
|
60000.00
|
150000.00
|
150000.00
|
DEFERRED TAX LIABILITY
|
60000.00
|
0.00
|
0.00
|
DEFERRED TAX ASSETS
(BEING REVERSAL OF LIABILITY)
|
0.00
|
30000.00
|
30000.00
|
TAX EXPENSE
= 30% OF PROFIT BEFORE TAXES OR CURRENT TAX+DTL-DTA |
120000.00
|
120000.00
|
120000.00
|
NET TIMING DIFFERENCE
|
200000.00
|
100000.00
|
0.00
|
BALANCE OF DEFERRED TAX LIABILITY
|
60000.00
|
30000.00
|
0.00
|
ENTRIES FOR THIS EXAMPLE:
In year I
Profit & Loss A/C DR 60000/-
To Provision for Income Tax A/C 60000/-
(Being provision made for tax payable for current year)
Profit & Loss A/C DR 60000/-
To Deferred Tax liability A/C 60000/-
(Being Deferred Tax liability created on account of timing difference)
In Balance sheet Deferred Tax liability will be reflected by Rs.60000/-
In year II
Profit & Loss A/C DR 150000/-
To Provision for Income Tax A/C 150000/-
(Being provision made for tax payable for current year)
Deferred Tax Asset A/C DR 30000/-
To Profit & Loss A/C 30000/-
(Being deferred tax liability reduced on reversing timing difference)
In Balance sheet Deferred Tax liability will be reflected by Rs.30000/-
In year III
Profit & Loss A/C DR 150000/-
To Provision for Income Tax A/C 150000/-
(Being provision made for tax payable for current year)
Deferred Tax Asset A/C DR 30000/-
To Profit & Loss A/C 30000/-
(Being deferred tax liability reduced on reversing timing difference)
Deferred Tax liability is zero so there is no question to reflect it in Balance sheet.
Please note that net of deferred tax liability and asset will be reflected in Balance Sheet.
There are so many reasons for which allowable depreciation for tax purpose and depreciation booked in accounts differs. The rate of depreciation may differ in law and in books. The method of depreciation may differ in law and in books. The method of calculation may differ as in books we may depreciate the assets individually account wise whereas for tax purpose depreciation may be calculated block wise.
First time introduction of Deferred Tax in Books of accounts.
(Transitional Provisions)
As per AS 22 “On the first occasion that the taxes on income are accounted for in accordance with this Standard, the enterprise should recognise, in the financial statements, the deferred tax balance that has accumulated prior to the adoption of this Standard as deferred tax asset/liability with a corresponding credit/charge to the revenue reserves, subject to the consideration of prudence in case of deferred tax assets (see paragraphs 15-18). The amount so credited/charged to the revenue reserves should be the same as that which would have resulted if this Standard had been in effect from the beginning.”
To introduce deferred tax first time in the books, we have to find Difference between the Value of Assets as per Books of Accounts and the Value of Assets as per Income Tax Act. To simplify if we have fixed assets in the books as gross block Rs.250 lacs and accumulated depreciation Rs.150 lacs, the net value in the books is Rs.100 lacs. Suppose, the net block value as per Income Tax calculation (as per tax audit) Rs.80 lacs. It means that in future we shall calculate depreciation on Rs.100 lacs whereas as per Income Tax Act, the depreciation will be calculated on Rs.80 lacs. This will result in less allowable depreciation creating more tax liability in future. Therefore, we have to create Deferred Tax liability for this future Tax liability. The timing difference is Rs.20 lacs on which we have to create Deferred Tax Liability of Rs.6 lacs at the assumed I.tax rate of 30%. In the same way we have to introduce for all differeciating assets and liabilities.
Suppose, a firm has the following positions as on 31-03-13.
Asset / Liability
|
as per books
|
as per I.tax.
|
difference
|
DTL (+)
DTA (-) @ 30% |
Assets:
| ||||
Net fixed assets-written down value.
(In future more tax has to be paid on less allowable depreciation as per tax law)
|
100.00
|
80.00
|
20.00
|
6.00
|
Liabilities:
| ||||
Provision for gratuity
(when paid in future it will reduce tax at that time)
|
40.00
|
0.00
|
-40.00
|
-12.00
|
Provision for staff leave encashment
(when paid in future it will reduce tax at that time)
|
30.00
|
0.00
|
-30.00
|
-9.00
|
Total
|
-50.00
|
-15.00
|
The entry to be passed in books for Rs. 15.00 lacs DTA newly introduced.
Deferred Tax Asset A/C DR 1500000/-
To Revenue Reserve A/C 1500000/-
ANNUAL CALCULATION
It may be noted that we don’t have to calculate deferred tax on each and every transactions related to it. The Deferred Tax is calculated annually from comparison of book profit and taxable profit. The Deferred Tax Liability or Deferred Tax Asset is derived from the comparison of Profit & Loss A/c of Balance sheet and Computation of Total Income for Income Tax purpose. If any amount is expensed out in Profit & Loss A/c but not deducted for Income tax purpose, it will create Deferred Tax Asset. If any amount claimed in Income Tax is more than expensed out in Profit & Loss A/c, it will create Deferred Tax Liability.
The net difference of DTA / DTL is computed and transferred to Profit & Loss A/c. The Balance of Deferred Tax Liability / Asset is reflected in Balance sheet. For that the following simple statement may be used.
For the above example, Suppose in during 2013-14, the firm makes payments from provision and makes new provisions from P/L A/c.
Details
|
P/L A/c
|
Computation of Income
|
difference
|
DTL(+) /
DTA(-) @ 30% |
Opening balance of
DTL(+) / DTA (-) |
-15.00
| |||
Comparison of P/L A/c and Computation of Income
| ||||
payment of staff leave encashment from provision
|
10.00
|
10.00
|
3.00
| |
payment of gratuity from provision
|
15.00
|
15.00
|
4.50
| |
new provision for staff leave made from P/L A/c
|
5.00
|
-5.00
|
-1.50
| |
new provision for gratuity made from P/L A/c
|
5.00
|
-5.00
|
-1.50
| |
depreciation as per books and tax audit
|
20.00
|
16.00
|
-4.00
|
-1.20
|
Total of comparison
|
3.30
| |||
Closing Balance of DTL(+) / DTA (-)
|
-11.70
|
Or using Balance sheet approach also we can derive same figure as under:
The closing balance of assets assuming depreciation rate of 20% will be Rs.80 & 64 lacs respectively. The closing balance of Gratuity provision will be 40-15+5=30 lacs and for Provision of Leave Encashment will be 30-10+5=25 lacs. The calculation will be as under.
Asset / Liability
|
as per books
|
as per I.tax.
|
difference
|
DTL (+)
DTA (-) @ 30% |
Assets :
| ||||
Net fixed assets
|
80.00
|
64.00
|
16.00
|
4.80
|
Liabilities:
| ||||
Provision for gratuity
|
30.00
|
0.00
|
-30.00
|
-9.00
|
Provision for staff leave encashment
|
25.00
|
0.00
|
-25.00
|
-7.50
|
total
|
-39.00
|
-11.70
|
Last year Deferred Tax Assets were of Rs. 15 lacs which arrived at 11.70 lacs current year. So there is a deferred tax liability of Rs. 3.30 lacs for current year.
The only one entry will be passed in books for Rs. 3.30 lacs DTL newly calculated.
Profit & Loss A/C DR 330000/-
To Deferred Tax Liability A/C 330000/-
The balance of RS 11.70 lacs DTA will be reflected at asset side in Balance sheet.
As per revised schedule VI, DTL/DTA will be shown under “ Non Current Liabilities / Non Current Asset ”.
The readers are requested to consult their Tax Consultant before implementing. The writer does not take any responsibility for views reflected in the article.
Big Thanks: DIPESH SHAH
Source: http://www.caclubindia.com/articles/deferred-tax-entries-15482.asp
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