Escolar Documentos
Profissional Documentos
Cultura Documentos
Basics
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Mona Iyer
CEPT University
Session Outline
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Profit and loss Account
• PROFIT BEFORE DEPRE & TAX (A-B)+(C-D)
i.e. Net Operating Profit + Net Non-Operating Profit
• Depreciation as per CO Act
PROFIT BEFORE TAX
Corporate Tax
PROFIT AFTER TAX
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Depreciation
• A regular reduction in asset value over time.
• Tax deductable
• As per IT Act and Co. Act
• Two Methods
• Written Down Value Method
• Straight Line Method
• WDV for IT purpose
• SLM for Company’s internal P & L
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Depreciation
• Written Down Value Method
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• Dn = I (1-d)^(n-1) * d
Depreciation
• Straight Line Method
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•Taxable income
•Corporate Tax
• A levy placed on the profit; different rates are used for different levels of
profits and types of projects (@ 35% for Infra projects)
• Tax Holiday
• 10 years for initial 15-20 years
• Mini Alternative (MAT) Tax/ Alternative Mini Tax (AMT)
• To avoid zero tax scenario (@ 7-7.7%)
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Cash Flows
It is inflow and outflow of cash that matters
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• SOURCES OF CASH
• Net Profit After Depreciation & Taxes
• Depreciation
• Transfer from Cash Surplus
• Transfer from Debt Service Reserve
• Sub-ordinated Debt /grant /equity for Rolling Stock additions during Operations
• A. Total Sources of Cash
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• USES OF CASH
• Transfer to Debt Service Reserve
• Transfer to Cash surplus
• Rolling Stock Additions during Operations Period
• B. Total Uses of Cash
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Cash Flows
• Three stages of cash flow
• Initial Investment (Capital investment plan)
• Net Annual Cash Flow (Cash Flow Statement)
• Terminal Cash Flows (Cash Flow Statement)
• Salvage value of assets sold (if any)
• Cash proceeds to be added as cash inflow in last year
• Removal cost (to replace existing asset)
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• Tax Holiday: A benefit granted to a project that
provides project owners an exemption from
taxation for a negotiated or statutory period.
• Salvage Value: Market price of asset/investment
at time of sale