INSUBCONTINENT EXCLUSIVE:
A one-time impact will be made while computing the profit after tax.2 min read Last Updated : Aug 19 2024 | 10:48 PM IST
Bajaj Auto Ltd
on Monday said it will need to increase its provision for deferred tax by Rs 211 crore due to the withdrawal of indexation benefit and
change in the tax rate on long-term capital gains on debt mutual fund.
The company invests its surplus funds into a range of asset
classes, including debt mutual funds
It was making accounting provisions for deferred tax as per applicable law on fair value gains on these investments, Bajaj Auto said in a
regulatory filing.
A one-time impact will be made while computing the profit after tax, and reporting the financial results for Q2 of
FY25, it added.
Bajaj Auto said the Finance (No 2) Act 2024 withdraws the indexation benefit on long-term capital gains on debt mutual
funds purchased before 1 April 2023.
"Further, the tax rate with respect to long-term capital gains for the said asset class has been
changed from 20 per cent plus surcharge and cess (with indexation) to 12.5 per cent plus surcharge and cess (without indexation)," it
added.
Due to the withdrawal of the indexation benefit and change in tax rate, the accounting provision for Deferred Tax on Investment
Income so created needs to be restated, the company said.
"The current accounting provision for deferred tax created by the company would
need to be increased by Rs 211 crore to recognise the aforesaid change
A provision in respect of this cumulative one-time impact will be made while computing the profit after tax and in reporting the financial
results for Q2 of FY 2024-25," it added.
The company further said only a provision is being made in the books of accounts at this point in
time to record the deferred tax in line with the applicable accounting standards and the recently enacted tax change.
The actual payment
of tax would be made at the time of redemption of these mutual funds
The cash outgo towards tax could be different at the time of redemption depending on the actual gain and actual prevailing tax regime, it
added.(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is
auto-generated from a syndicated feed.)First Published: Aug 19 2024 | 10:48 PMIST
