Defferred tax

Deferred tax means it is a timing difference between the 
companies and income tax act. 
Deferred tax liability arise when the IT Act Depreciation 
higher than the companies act depreciation. 
Deferred tax Asset arise when the IT Act Depreciation 
lesser than the companies act depreciation. 

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First understand why deferred tax was brought in. 

Companies have book profits and income tax profits. Tax is paid on income tax profits but dividend is issued based on book profits. There can a chance that the company is not paying any income tax but issuing huge dividends. To cut this short and to keep a buffer to the company determination of exact profits are required. 

There are provisions under income tax which will lead to timing difference. Ex. you may pay tax today but profit might come to you actually in the future years. 

To tackle this deferred tax was brought in 

So first identify all the timing differences. It could be depreciation, preliminary expenses , expenses on which TDS is done late, etc