Query in Mafa

Actually tax on loss is nothing but the tax shield or u may call it tax saved.

If it is an existing company then it can save tax by setting it off against profits of other business. I can give more specific answer if I can get the problem. So please post the details of problem.

Mobeen is right.

it was in capital budegting chapter of PE II & pcc tax  on loss means the tax shield

for eg If u incurr loss of 1lac & tax rate is 30% then tax on loss which was not paid due to loss is 30000 therefore actual loss to u is of only 70000.

i hope u have been clear from this eg

As you know that there is a tax liability on profits/ gain, similarly there is also a tax saving on losses. if u have a loss from one head of income, then u can set it off against  income under other head in some cases n if u don't have any other income, u will carry it forward.In the case of co., it will set it off against another  income n ultimately the crux is that co. will save tax which need to be considered while making capital budgeting decision just like tax liability is considered in the same decisions.

Hi all,

Thanks for all your reply.

HI Ketan Shah

If you have Mr. Rastogi's book please refer in it.

Balaji Sarangarajan.