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 Interview Questions (Continued...) Income Tax What is deferred tax asset, its effect in financial statements and journal entry? Deferred tax assets are  items that may be used for tax relief purposes in the future . Usually, it means that your business has overpaid tax or has paid tax in advance, so it can expect to recoup that money later. This sometimes happens because of changes in tax rules that occur in the middle of the tax year. Journal Entries for Deferred Tax Assets. If a company has overpaid its tax or paid advance tax for a given financial period, then the excess tax paid is known as defer ed tax asset. Such taxes are recorded as an asset on the balance sheet and are eventually paid back to the Company or deducted from future taxes.   What is Commercial Tax? Commercial Tax, currently referred to as  Goods and Services Tax  (GST) in India, is a tax that is levied on locally manufactured and imported goods and services, and contributes to the...