Income earn

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This discussion explores how an individual can meet significant monthly loan repayments of approximately £100,000 for business and car loans, despite reporting a net income of only £50,000. The query questions whether depreciation charges, a non-cash expense, can offset loan repayments, which are typically paid from net income. It suggests preparing a cash flow statement, where cash from operations equals net profit plus depreciation, to clarify the financial situation.

Ashim kr Ray

Ashim kr Ray (Querist)

26 September 2023 Sir,

A person is repaying loan near about 1lac per month ,which is business loan and car loan.
i want to know what would be net Income to meet such monthly expenses.As the person say his monthly income is 50k approx.his turnover is1.30cr.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

27 September 2023 Business loan and car loan can be paid out of depreciation charge which is not a cash expense.

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Ashim kr Ray

Ashim kr Ray (Querist)

27 September 2023 sir
Can you little clarify , as i know loan amount has to be paid from net income,an his net income income is less than loan repayment,is it possible to deduct loan amount from depreciable charges.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

27 September 2023 Prepare a cash flow statement.
Cash from operations will be net profit plus depreciation.
Depreciation is a non cash outflow expenses.

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