Deferred tax liability represents taxes that a company would have had to pay under its regular financial accounting but that it has deferred to the future by way of the tax code.
Deferred Tax Reliablity arises due to difference in the value of assets as per books of accounts and as per Income Tax act.
For Example : Imagine that your company could report $5,000 in profit either this year or next year and that whenever it reports that profit, it will pay a tax of 30 percent. In your tax accounting, you push that profit into next year, freeing up $1,500 for investment rather than paying taxes. In your financial statements, you report the $5,000 profit upfront. But since the company doesn’t actually pay taxes on that money, its balance sheet must show that $1,500 in future cash is now “spoken for.” It does that by creating a $1,500 deferred tax liability.