help required
This query is : Resolved
22 April 2009
actually i was solving RTP of PCC and there i saw sums like in many sums of capital budgeting they actually calculate tax on negative profits
but in JK shah classes its not this way
so either we should strictly follow RTP even its wrong or should follow our classes way.
Please help
but in JK shah classes its not this way
so either we should strictly follow RTP even its wrong or should follow our classes way.
Please help
22 April 2009
While solving capital Budgeting one should calculate tax on negative profit, the Logic behind is that Negative profit (i.e. loss) can be setted - off from other income and can be carried forward and in such a case it saves tax amount.
For example if negative profit of rs 50000 arise it can be setted off with other income and then it will save Rs. 15000 (assuming Tax Rate 30%).
This is a general assumption that the -ve profit can be setted - off , however if the sum specifically indicates(which is found in CA final ) that the business has no other sources to set off and Carry forward then , NO need to compute TAx on loss.
See tax on negative profit reduces loss. E.g. -ve profit 50000 tax on it @ 30% rs -15000, So final loss is [(-50000-(-15000)]
= (-50000 + 35000) = - 35000
Hope it is clear now
For example if negative profit of rs 50000 arise it can be setted off with other income and then it will save Rs. 15000 (assuming Tax Rate 30%).
This is a general assumption that the -ve profit can be setted - off , however if the sum specifically indicates(which is found in CA final ) that the business has no other sources to set off and Carry forward then , NO need to compute TAx on loss.
See tax on negative profit reduces loss. E.g. -ve profit 50000 tax on it @ 30% rs -15000, So final loss is [(-50000-(-15000)]
= (-50000 + 35000) = - 35000
Hope it is clear now
22 April 2009
I agree with Mr.Manmohan.
But tax is not calculated on negative profit in the year of it is incuured but it is deducted from next year's profit and tax is calculated on net profit.
This approach is as per income tax laws and correct discounting rate application.
But tax is not calculated on negative profit in the year of it is incuured but it is deducted from next year's profit and tax is calculated on net profit.
This approach is as per income tax laws and correct discounting rate application.
22 April 2009
So ultimately is CA institute's RTP correct or not?
and we should follow which method in PCC
and we should follow which method in PCC
23 April 2009
NO tax is calculated in case of negative profit assuming that the loss will be setted off in the same year with some other income of the same management and RTP is completely right. If it is expressly given that the company does not any other business then only it will be setted with the profit of next year.
"RTP is right"
"RTP is right"
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- CG Tax On residential property
- Applicable TDS for Purchase of Flat from NRI
- Claiming exemption of perquisite for employee-owned car under New Tax Regime in ITR-2
- Under construction property in ITR
- Gift of mutual fund units to daughter
- Building tax payment deduction in rental Income
- Upload Level ValidationITR3Category of Defect B/D
- Reporting of STCG on Property in ITR
- NRI ITR2 account in 2025-26 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,.
- Not able to file ITR
- PF Taxable Income
- Clarification on Tax Audit Applicability and Reporting of F&O Transactions in ITR-3
- Interest credited in FY2025-2026 & TDS therein by EPFO does not reflect in AIS or Form 26AS
- 44ad eligble money lending interest
- Delisted shares sold in off market/ Rebate u/s87A
- In Exports Sales HSN details where to fill
- Opting out" of regime provided under subsection (1A) of Section 115BAC but Form 10IEA is not filed.
- Difference in tax comparison report
- Gst invoice numbering and delivery challan numbering
- Sales amount in Gstr1
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
