Amber Ltd bought a building for ₹20,00,000 (life 4 years, nil scrap). Accounting depreciation is straight-line; tax depreciation is 50% in year 1, 50% in year 2 and nil thereafter. Tax rate 30%. In 2023-24 the tax depreciation is nil but accounting depreciation is ₹5,00,000. What is the deferred tax effect for that year?

1. Timing difference reverses: accounting depreciation ₹5,00,000 now exceeds tax depreciation nil, a reversing difference of ₹5,00,000. 2. Deferred tax effect = ₹5,00,000 × 30% = ₹1,50,000. 3. Because the original difference is reversing, ₹1,50,000 of the earlier deferred tax liability is reversed. _Source: ICAI BoS CA Intermediate Paper 1 (Advanced Accounting), Sept 2025 — Q.1(a), AS 22 Accounting for Taxes on Income._