CARO Applicability - PVT CO.

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)]

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