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Deferred Tax Assets & Liabilities
What is deferred Tax Assets & Liabilities
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Deferred Tax Assets & Liabilities arises when books are maintained as per some other Law ( Example- Companies Act,2013).
Deferred Tax Liability- When tax paid is less than the tax which is payable as per Income Tax Act, the liability to pay tax computed as per Income Tax Act is temporarily deferred.It is an addition to the future tax liability.
Deferred Tax Asset- It is the reverse of Deferred Tax Liability.When tax paid is more than the tax which is payable as per Income Tax Act. It is a reduction to the future Tax Liability.
Example- Method of depreciation followed
As per Companies Act- Life based Depreciation
As per Income Tax Act- Rate based Depreciation.
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