BMC Associates says Replied on 20th June,2026 11:36 AM

No — goodwill arising in a business combination is generally not treated as a deferred tax liability on initial recognition. Correct treatment: Under IAS 12 / Ind AS 12, deferred tax liability is not recognized on the initial recognition of goodwill arising in a business combination. This is because goodwill is a residual figure, and recognizing deferred tax on it would artificially change the amount of goodwill itself. Tax deductibility of goodwill: Goodwill is not automatically treated as a tax-deductible expense in the books. Its tax treatment depends on the applicable tax law: If tax law allows deduction/amortisation of goodwill, then tax effects may arise accordingly. If not allowed, no tax deduction is available. In simple words: Initial goodwill in business combination → No deferred tax liability on initial recognition Tax deduction for goodwill → depends on tax law, not automatic in books For accounting, tax, and business combination related guidance, businesses often consult experienced chartered accountant firms in gurgaon. A qualified chartered accountant gurgaon, trusted ca firm in gurgaon, or professional ca in gurgaon can help in proper treatment of goodwill, deferred tax, and financial reporting.