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Calculation of Net profit as per Section 198

Company had issued OCDs and as per IND-AS adjustment.. Company have to book a gain or loss with respect to Change in estimate of financial liability... Accordingly Company has shown a Notional gain i.e. 'Change in estimate of financial liability' in Other Income.

Now, As per 198(3)(e) Credit shall not be given for  any amount representing unrealised gains, notional gains or revaluation of assets.

What shall be the adjustment of this Notional gain while calculation NP u/s 198? Whether we will take credit of it or not

 2 Replies

yasaswi gomes

yasaswi gomes (My grammar is 💯 good I)     17 July 2021

I’m not sure of the deferred taxes arising, 

OCD is a convertible debt option at amortised cost. No profit or loss will arise and neither will revaluation take place. 

Give me some time, I’ll find out the principles. 

yasaswi gomes

yasaswi gomes (My grammar is 💯 good I)     17 July 2021

The notional gain arises only when the issuer is repurchasing the bond before maturity. Yes you can avail credit on ocd interest until either the bond is


until converted

or repurchased


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