Differed Tax is difference in the tax liability as per
Accounting profit and Tax liability as per Income tax Act
Differed tax araises due to timing differences of recognition of
various tax deductible transactions in both Accounting and tax
calculations. Eg: Depreciation on Fixed Assets. for example As
per companies act one asset is eligible for 100% depreciation in
the first year itself, but the case may not be the same under
sec 32 of the Income tax act it may gives some other rate of
depreciation on that asset.lets assume it allows only 50% in the
first year and remaining in the subsequent year. as per
accounting books shows a lower profit and tax liabiltity due to
higher depreciation claimed in this year ony compared to IT
profit. It is a clear case of Differed tax asset..... we will
pay more in this year we will carry it as a differed tax asset
in our balance sheet which is going to be offset in the coming
year...... in the short range period difference will apprear but
in long range timing difference is