The company was provisioning for deferred tax as per applicable law on fair value gains on the investments.
20 Aug 2024 | 1437 Views | By Autocar Pro News Desk
Bajaj Auto on Monday, 19 August, 2024, noted that it would have to increase its provision for deferred tax by Rs 211 crore, on the back of withdrawal of indexation benefit and change in tax rate on long term capital gains on debt mutual fund, PTI noted.
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Bajaj Auto on Monday, 19 August, 2024, noted that it would have to increase its provision for deferred tax by Rs 211 crore, on the back of withdrawal of indexation benefit and change in tax rate on long term capital gains on debt mutual fund, PTI noted.
The auto major invests its excess funds into a variety of asset classes which include debt mutual funds. The company is provisioning for deferred tax as per applicable law on fair value gains on the investments, it noted in a regulatory filing.
The company further added that a one time impact will be made while calculating the profit after tax and reporting financial results for the second quarter of FY25.
Bajaj Auto further noted that the Finance (No 2) Act 2024 withdraws indexation benefit on long term capital gains on debt mutual funds acquired prior to 1 April, 2023.
On the back of withdrawal of the indexation benefit and change in the tax rate, the accounting provision for Deferred Tax on Investment Income so created, needs to be restated, it noted.
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.