What is a deferred tax asset and why might one be created?
What is a deferred tax asset and why might one be created?
In Simple words, Deferred Tax Liability is a Provision for Future Taxation.This is in stark Contrast to Provision for Taxation. Provision for Taxation is basically a provision for Current year Taxation. Deferred Tax Liability arises due to timing difference in the value of Assets as per Books of Accounts and as per Income Tax Act.
Also we can say that Deferred Tax Liability/Asset arises due to the difference between Profit as per Books of Accounts (P&L Account) and profit as per Income Tax Act. (Taxable Income).
