Page 154 - Tata_Chemicals_yearly-reports-2017-18

2.17 Employee separation compensation excludes items that are never taxable or deductible.
The Company’s liability for current tax is calculated
Compensation paid/payable to employees who have
using tax rates and tax laws that have been enacted
opted for retirement under a Voluntary Retirement
Scheme including ex-gratia is charged to the or substantively enacted by the end of the reporting
Statement of Profit and Loss in the year of separation. period.
Current tax assets and current tax liabilities are offset
2.18 Borrowing costs
when there is a legally enforceable right to set off
Borrowing costs are interest and ancillary costs incurred the recognised amounts and there is an intention to
in connection with the arrangement of borrowings. realise the asset or to settle the liability on a net basis.
General and specific borrowing costs attributable
to acquisition and construction of qualifying assets Deferred tax is the tax expected to be payable or
is added to the cost of the assets upto the date the recoverable on differences between the carrying
values of assets and liabilities in the financial
asset is ready for its intended use. Capitalisation of
statements and the corresponding tax bases used in
borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods the computation of taxable profit and is accounted
when active development activity on the qualifying for using the balance sheet liability method. Deferred
assets is interrupted. All other borrowing costs are tax liabilities are generally recognised for all taxable
temporary differences arising between the tax base
recognised in the Statement of Profit and Loss in the
of assets and liabilities and their carrying amount,
period in which they are incurred.
except when the deferred income tax arises from the
2.19 Government grants initial recognition of an asset or liability in a transaction
Government grants and subsidies are recognised that is not a business combination and affects neither
when there is reasonable assurance that the Company accounting nor taxable profit or loss at the time of the
will comply with the conditions attached to them and transaction. In contrast, deferred tax assets are only
the grants and subsidies will be received. Government recognised to the extent that it is probable that future
grants whose primary condition is that the Company taxable profits will be available against which the
should purchase, construct or otherwise acquire non- temporary differences can be utilised.
current assets are recognised as deferred revenue in The carrying value of deferred tax assets is reviewed
the Balance sheet and transferred to the Statement of at the end of each reporting period and reduced to
Profit and Loss on systematic and rational basis over the extent that it is no longer probable that sufficient
the useful lives of the related asset. taxable profits will be available to allow all or part of
2.20 Segment reporting the asset to be recovered.
The operating segments are the segments for which Deferred tax is calculated at the tax rates that are
separate financial information is available and for expected to apply in the period when the liability is
which operating profit/loss amounts are evaluated settled or the asset is realised based on the tax rates
regularly by the Managing Director and Chief Executive and tax laws that have been enacted or substantially
Officer (who is the Company’s chief operating decision enacted by the end of the reporting period. The
maker) in deciding how to allocate resources and in measurement of deferred tax liabilities and assets
assessing performance. reflects the tax consequences that would follow from
the manner in which the Company expects, at the end
The accounting policies adopted for segment
reporting are in conformity with the accounting of the reporting period, to cover or settle the carrying
value of its assets and liabilities.
policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have Deferred tax assets and liabilities are offset to the
been identified to segments on the basis of their extent that they relate to taxes levied by the same tax
relationship to the operating activities of the segment. authority and there are legally enforceable rights to set
Inter segment revenue is accounted on the basis of off current tax assets and current tax liabilities within
transactions which are primarily determined based on that jurisdiction.
market / fair value factors. Revenue, expenses, assets Current and deferred tax are recognised as an expense
and liabilities which relate to the Company as a whole or income in the statement of profit and loss, except
and are not allocable to segments on a reasonable when they relate to items credited or debited either in
basis have been included under ‘unallocated revenue other comprehensive income or directly in equity, in
/ expenses / assets / liabilities’. which case the tax is also recognised in OCI or directly
2.21 Income tax in equity.
Tax expense for the year comprises current and Deferred tax assets include a credit for the Minimum
deferred tax. The tax currently payable is based on Alternate Tax (‘MAT’) paid in accordance with the tax
taxable profit for the year. Taxable profit differs from net laws, which is likely to give future economic benefits in
profit as reported in the statement of profit and loss the form of availability of set off against future income
because it excludes items of income or expense that tax liability. MAT asset is recognised as deferred tax
are taxable or deductible in other years and it further assets in the Balance Sheet when the asset can be
152 Annual Report 2017-18