CARO will not be applicable if all the below conditions are satisfied together:-
- Private limited company
- Paid up capital & reserves is 50 lacs or less (Reserve Include Capital Reserve, Revenue Reserve, Revaluation Reserve)
- Any debit balance of P&L a/c should be deducted from REVENUE RESERVE.
- If there is no revenue reserve then debit balance in P&L a/c cannot be deducted from capital and any reserves.
- Miscellaneous expenditure should not be deducted.
- Outstanding loan from Banks or Financial Institutions is 25lacs or less
- It includes Term loan, Demand loan, Export credit, Working capital limit, Cash credit, Overdraft facilities, Bill Purchased and Bank Guarantees.
- Interests accrue and due should be included in loan.
- Interests accrue but not due should not include in loan.
- Loan may be short term or long term, secured or unsecured.
- Loan taken from a private bank or foreign bank would also be taken in to consideration.
- Turnover is 5 crores or less.
Turn Over- It includes sale of goods and services both and commission allowed to third parties. But it does not include
- Trade Discount
- Sales Tax/Excise Duty
- Sales Return
In case of where the principal business of the company is letting out of property or it is an investment company, the rent or dividend/interest would constitute turn over.
All the above limits will be considered at any time during the financial year covered under audit.