Bajaj Auto To Hike Provision For Deferred Tax By Rs 211 Crore Post Indexation Benefit Withdrawal | Auto News

A one-time impact will be made while computing the profit after tax, and reporting the financial results for Q2 of FY25, it added. Bajaj Auto said the Finance (No 2) Act 2024 withdraws the indexation benefit on long-term capital gains on debt mutual funds purchased before 1 April 2023.

“Further, the tax rate with respect to long-term capital gains for the said asset class has been changed from 20 per cent plus surcharge and cess (with indexation) to 12.5 per cent plus surcharge and cess (without indexation),” it added.

Due to the withdrawal of the indexation benefit and change in tax rate, the accounting provision for Deferred Tax on Investment Income so created needs to be restated, the company said.

“The current accounting provision for deferred tax created by the company would need to be increased by Rs 211 crore to recognise the aforesaid change. A provision in respect of this cumulative one-time impact will be made while computing the profit after tax and in reporting the financial results for Q2 of FY 2024-25,” it added.

The company further said only a provision is being made in the books of accounts at this point in time to record the deferred tax in line with the applicable accounting standards and the recently enacted tax change.

The actual payment of tax would be made at the time of redemption of these mutual funds. The cash outgo towards tax could be different at the time of redemption depending on the actual gain and actual prevailing tax regime, it added.