i want to know whether private company whose share capital is 25 lacs and company incurred loss of 1 crore during the first year. whether this company will come under the criteria of CARO reporting.
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CARO Applicability - PVT CO.
Replies (10)
In your case, CARO will not be applicable.
It is applicable when during financial year:
1. paid up capital and reserves exceeds 50 Lakhs
2. Outstanding Loan exceeds Rs. 25 Lakhs or
3. Turnover exceeds Rs. 5 Crore
CARO is applicable when all the following conditions are fulfilled
1. Paid up capital & reserves exceeds Rs. 50 lakhs
2. Outstanding loan exceeds Rs. 25 Lakhs
& 3. Turnover exceeds Rs. 5 crore
In ur case information regarding 2 & 3 is not given
CARO, 2003 and CARO (Amendment), 2004 - A Comparative Analysis
[Submitted by Mr. V.M.V. Subba Rao, B.Com., F.C.A., D.I.S.A(ICA)]
|
Sl. No. |
Clause |
CARO, 2003 |
CARO (Amend), 2004 |
Amendments / Remarks |
|
01 |
Clause (iv)(2) of Para 1 |
a private limited company with a paid up capital and reserves not more than fifty lakh rupees and has not accepted any public deposit and does not have loan outstanding ten lakh rupees or more from any bank or financial institution and does not have a turnover exceeding five crore rupees. |
'a private limited company with a paid up capital and reserves not more than rupees fifty lakh and which does not have loan outstanding exceeding rupees twenty five lakh from any bank or financial institution and does not have a turnover exceeding rupees five crore at any point of time during the financial year. |
1. The Pvt. Ltd. Companies cannot legally raise public deposits and hence the clause has been omitted. |
thanks a lot for your valuable suggestion but i m also having some confusing regarind the first condition and if u can give me more clarification on that.
the question remains the same as above for the first point
sahre capital is Rs. 25L and loss is Rs. 1Crore HENCE CARO IS NOT APPLICABLE.
FUTHER CARO IS NOT APPLICABLE EVEN IF SHARE CAPITAL IS 75 L AND LOSS IS RS. 1 CRORE
| Originally posted by : Nirav | ||
 |
i want to know whether private company whose share capital is 25 lacs and company incurred loss of 1 crore during the first year. whether this company will come under the criteria of CARO reporting. |
 |
Please provide other info too -
1. turnover ?
2. highest amount of Outstanding loan, from bank/Financial Institutions, AT ANYTIME DURING THE YEAR (even for a single day)
3. Paid Up Capital ?
4. Free Reserves ??
even a single point mentioned above can change the applicability of CARO..
Mr. Nirav
You always mentioning paid up capital is 25 lac but what isreserve, please explane......whether it is more tnan paid up capital...?
Regards
Mr. Ajay
The company has commenced in previous year and this is the first year of reporting. in this year company paid up share capital is 25 lacs and incurred loss of Rs. 1 crore which will create a debit balance of profit and loss account which is considered as reserve too.
so my question is wherther this condition satisfies the first condition for CARO applicability.
and also if the company is having paid up share capital of 25 lacs and its profit and loss account is having debit balance of 50 lacs would it qualify under the first condition
Dear Nirav
Debit balance in Profit and loss need not be considered as a reserve at all.
In fact, you should set off debit balance in the Profit and loss against any other free reserves, to determine whether the company has
Paid up cpl + Reserves > 50 lakh
What has filled the hole in your balance sheet?
Where has 75 lakhs come from on the liabilities side? Directors?
Dear Nirav,
As per the clause the company is not qualifying the first condition so CARO is not applicable to it.
as per the infomation provided by you, as cumulative of Share Capital and Reserve should be more than Rs. 50 Lacs and in your case it goes negative.
Hope the above explanation must have cleared your querry.
Thanks
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