Sep/Dec 15 Q.1 Deferred Tax accounting

GM Sir,

Regarding the deferred tax recognition –

The finance director’s suggestion that deferred tax should not be provided for is therefore incorrect, and at present liabilities are understated, representing an error in the statement of financial position. There is no profit impact, however, as the deferred tax would be recognised in equity. Depending on the rate of tax which would be used to determine the
necessary provision, it may not be material to the financial statements.

Why is it saying that there is no impact in profit? Isn’t the contra entry of deferred tax recorded in the P&L as Income Tax expense?