instruments which are measured at fair value or amortised
cost at the end of each reporting year. Historical cost is
generally based on the fair value of the consideration
given in exchange for goods and services. Fair value is the
price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market
participants at the measurement date.
1.1 Summary of material accounting policies:
a) Statement of compliance
These standalone financial statements are prepared in
accordance with Indian Accounting Standards (Ind AS) as
per the Companies (Indian Accounting Standards) Rules,
2015, as amended from time to time, notified under Section
133 of Companies Act, 2013, (the 'Act') and other relevant
provisions of the Act as amended from time to time.
All assets and liabilities have been classified as current and
non-current as per the Company's normal operating cycle.
Based on the nature of services rendered to customers and
time elapsed between deployment of resources and the
realisation in cash and cash equivalents of the consideration
for such services rendered, the Company has considered
an operating cycle of 12 months.
These standalone financial statements have been prepared
in Indian Rupee (H ) which is the functional currency of the
Company. All amounts have been rounded to the nearest
Crore or two decimals thereof, unless otherwise stated.
These standalone financial statements have been prepared
on historical cost basis except for certain financial
These Standalone financial Statements do not reflect
the effects of events that occurred subsequent to the
date of board meeting in which the Standalone financial
Statements is approved.
The statement of operating cash flows have been prepared
under indirect method.
c) Use of judgements and estimates
The preparation of Standalone financial statements in
conformity with Ind AS requires the management to make
judgments, estimates and assumptions that affect the
reported amounts of income, expenses, assets and liabilities
and the accompanying disclosures, and the disclosure
of contingent liabilities, at the end of the reporting year.
The key assumptions concerning the future and other key
sources of estimation uncertainty at the reporting date,
that have a material risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the
next financial year, are described below. The company
based its assumptions and estimates on parameters
available when the standalone financial statements were
prepared. Existing circumstances and assumptions about
future developments, however, may change due to market
changes or circumstances arising that are beyond the
control of the company. Such changes are reflected in the
assumptions when they occur.
The areas involving material judgement and estimates
are as follows:
Judgements:
Information about judgements made in applying accounting
policies that have the most material effects on the amounts
recognised in the standalone financial statements is
included in the following notes:
- Note 23: Fair value measurement of financial assets
Estimates:
Application of accounting policies that require critical
accounting estimates involving complex and subjective
judgments and the use of assumptions in these standalone
financial statements have been disclosed below:
- Note 22: Defined benefit obligation
- Note 2: Property, plant and equipment and other
intangible assets
- Note 23: Fair value measurement of
financial instruments
- Note 30: Share based payments
The preparation of the standalone financial statements
in conformity with the recognition and measurement
principles of the Ind AS requires management of the
company to make estimates, judgments and assumptions.
These estimates, judgments and assumptions affect the
application of accounting policies and the reported amounts
of assets and liabilities, the disclosures of contingent
assets and liabilities at the date of the standalone financial
statements and reported amounts of revenues and
expenses during the year. Application of accounting policies
that require critical accounting estimates involving complex
and subjective judgments and the use of assumptions in
these standalone financial statements have been disclosed
below. Accounting estimates could change from year to
year. Although these estimates are based on management's
best knowledge of current events and actions, uncertainty
about the assumptions and estimates could result in the
outcome requiring material adjustment to the carrying
amount of assets and liabilities.
Defined benefit
The cost of the defined benefits that includes gratuity
and compensated absences and the present value of the
defined benefit obligation are based on actuarial valuation
using the projected unit credit method. An actuarial
valuation involves making various assumptions that may
differ from actual developments in the future. These
include the determination of the discount rate, future salary
increases and mortality rates. Due to the complexities
involved in the valuation and its long-term nature, a
defined benefit obligation is highly sensitive to changes in
these assumptions. All assumptions are reviewed at each
reporting date.
Property, plant and equipment and other intangible
assets
Property, plant and equipment and other intangible assets
represent a material proportion of the asset base of the
Company. The charge in respect of periodic depreciation
is derived after determining an estimate of an asset's
expected useful life and the expected residual value at
the end of its life. The useful lives and residual values of
Company's assets are determined by management at
the time the asset is acquired and reviewed periodically,
including at each financial year end. The lives are based
on historical experience with similar assets as well as
anticipation of future events, which may impact their life,
such as changes in technology.
Leases
The company evaluates if an arrangement qualifies to be a
lease as per the requirements of Ind AS 116. Identification
of a lease requires material judgment. The company uses
material judgement in assessing the lease term (including
anticipated renewals) and the applicable discount rate. The
company determines the lease term as the non-cancellable
period of a lease, together with both periods covered by
an option to extend the lease if the company is reasonably
certain to exercise that option; and periods covered by an
option to terminate the lease if the company is reasonably
certain not to exercise that option. In assessing whether
the company is reasonably certain to exercise an option to
extend a lease, or not to exercise an option to terminate a
lease, it considers all relevant facts and circumstances that
create an economic incentive for the company to exercise
the option to extend the lease, or not to exercise the option
to terminate the lease. The company revises the lease term
if there is a change in the non-cancellable period of a lease.
The discount rate is generally based on the incremental
borrowing rate specific to the lease being evaluated or for a
portfolio of leases with similar characteristics.
Other tax assets and Deferred tax assets
The tax jurisdiction for the company is India. Material
judgments are involved in determining the provision for
income taxes, including amount expected to be paid/
recovered for uncertain tax positions.
The ultimate realization of deferred tax assets is dependent
upon the generation of future taxable profits during the year
in which those temporary differences and tax loss carry¬
forwards become deductible. The company considers the
expected reversal of deferred tax liabilities and projected
future taxable income in making this assessment.
The amount of the deferred tax assets considered
realizable, however, could be reduced in the near term
if estimates of future taxable income during the carry¬
forward year are reduced.
Fair value measurement of financial instruments
When the fair value of financial assets and financial liabilities
recorded in the balance sheet cannot be measured based on
quoted prices in active markets, their fair value is measured
using valuation techniques including the Discounted Cash
Flow model. The inputs to these models are taken from
observable markets where possible, but where this is not
feasible, a degree of judgement is required in establishing
fair values. Judgements include considerations of inputs
such as liquidity risk, credit risk and volatility. Changes in
assumptions about these factors could affect the reported
fair value of financial instruments. The policy has been
further explained under note 'r'.
Share based payments
The company is required to evaluate the terms to
determine whether share-based payment is equity settled
or cash settled. Judgment is required to do this evaluation.
Further, the company is required to measure the fair value
of equity settled transactions with employees at the grant
date of the equity instruments. The aforementioned inputs
entered in to the option valuation model that the company
uses to determine the fair value of the share awards are
subjective estimates, changes to these estimates will cause
the fair value of our share-based payments, and related
share-based compensation expense that the company
records to vary.
Interest income
For all debt instruments measured either at amortised
cost or at fair value through Profit or loss, interest income
is recorded using the effective interest rate (EIR). EIR is
the rate that exactly discounts the estimated future cash
payments or receipts over the expected life of the financial
instrument or a shorter period, where appropriate, to
the gross carrying amount of the financial asset or to the
amortised cost of a financial liability. When calculating the
effective interest rate, the company estimates the expected
cash flows by considering all the contractual terms of the
financial instrument (for example, prepayment, extension,
call and similar options) but does not consider the expected
credit losses. Interest income is included in other income in
the statement of profit and loss.
Trade receivables
Allowance for expected credit loss on trade receivables is
based on assumptions about risk of default and expected
timing of collection. The Company uses judgment in making
these assumptions and selecting the inputs to the expected
credit loss calculation based on the Company's history of
collections, customer's creditworthiness, existing market
conditions as well as forward looking estimates at the end
of each reporting period.
Provisions and contingent liabilities
The Company estimates the provisions that have present
obligations as a result of past events and it is probable
that outflow of resources will be required to settle the
obligations. These provisions are reviewed at the end
of each reporting period and are adjusted to reflect the
current best estimates.
The Company uses materialjudgements to assess contingent
liabilities. Contingent liabilities are disclosed when there is a
possible obligation arising from past events, the existence
of which will be confirmed only by the occurrence or non¬
occurrence of one or more uncertain future events not
wholly within the control of the Company or a present
obligation that arises from past events where it is either not
probable that an outflow of resources will be required to
settle the obligation or a reliable estimate of the amount
cannot be made. Contingent assets are neither recognised
nor disclosed in the standalone financial statements.
d) Revenue Recognition
The Company's primary source of revenue is from
e-governance public services and social security services
including pension fund. Revenue from operations includes
transaction fees and accounts maintenance fees charged for
IT-enabled solutions provided by the Company in delivery
of public services involving various offerings, chargeable
based on counts processed and at different rates; revenues
from fixed price contracts, tender based contracts and
managed services for domestic and international customers.
The Company exercises judgement for identification of
performance obligations, determination of transaction price
and in determining whether the performance obligation is
satisfied at a point in time or over a period of time.
To recognise revenues, the Company applies the five step
approach prescribed under Ind AS 115: (1) identify the
contract with a customer, (2) identify the performance
obligations in the contract, (3) determine the Transaction
Price, (4) allocate the Transaction Price to the performance
obligations in the contract, and (5) recognise revenues
when a performance obligation is satisfied.
Revenue is recognised upon transfer of control of promised
products or services to customers in an amount that
reflects the consideration the Company expects to receive,
i.e., the "Transaction Price", (net of variable consideration
on account of discounts, price concession, incentives or
penalties and excludes taxes such as GST) in exchange of
those products or services to a customer.
The Company recognises revenue in the period in which
it satisfies its performance obligation by transferring
promised goods or services to the customer. The Company
recognises revenue when the significant terms of the
arrangement are enforceable, services have been delivered
and the collectability is reasonably assured. When there
is uncertainty as to collectability, revenue recognition is
postponed until such uncertainty is resolved.
Contract Assets: A contract asset is right to consideration
in exchange of services that the company has rendered to a
customer when that right is conditioned on something other
than passage of time. Contract assets are recognised when
there is excess of revenue earned over billings on contracts.
Contract assets are classified as unbilled receivables (only
act of invoicing is pending) when there is unconditional
right to receive cash, and only passage of time is required,
as per contractual terms.
Contract liability: A contract liability is the obligation to
render services to a customer for which the Company has
received consideration from the customer. If a customer
pays consideration before the company renders services
to the customer a contract liability is recognised when the
payment is made. Contract liabilities are recognised as
revenue when the company renders services as per the
contract. The sources of revenue and Company's accounting
policy are as follows:
Transaction fees- revenue in respect of transactions or
counts is recognised in accordance with the Company's
fee scales at a point in time as and when the transactions
are completed, or services are consumed or services are
rendered whichever is earlier
Income from pension fund solutions represents services
which are recognised as per the terms of the contract with
customers when such related services are rendered.
Revenue in respect of account maintenance fees for
pension services is recognized over a period of time to
which the maintenance fee relates.
Revenue in respect of fixed price contract recognised using
achievement of performance obligations-based milestone
or cost to cost percentage completion method whichever
is applicable. The company estimates the future cost-to-
completion of the contracts which is used to determine
degree of completion of the performance obligation.
Cost plus contracts recognised as allowable contract costs
plus percentage of markup after netting off of SLA penalties
or service credits.
Managed services model revenue recognised
periodically based on fixed monthly service fee or
consumption-based metrics.
Revenue from time and material contracts is recognised
using the output method measured by efforts expended,
number of transactions processed, etc. Revenue related
to fixed price maintenance and support services contracts,
where the Company is standing ready to provide services is
recognised based on time elapsed on a straight-line basis
over the period of performance.
Instances when revenue is derived from sales of third-party
vendor services, material or licenses, revenue is recorded
on a gross basis when the Company is a principal to the
transaction and net of costs when the Company is acting
as an agent between the customer and the vendor, once
control of a promised good is transferred to a customer.
Contracts are subject to modification to account for
changes in contract specification and requirements. The
Company reviews modification to contract in conjunction
with the original contract, basis which the transaction price
could be allocated to a new performance
obligation, or transaction price of an existing obligation
could undergo a change. In the event transaction price is
revised for existing obligation, a cumulative adjustment
is accounted for.
An onerous contract provision is recognized when
the expected unavoidable costs of meeting the future
obligations exceed the expected economic benefits to be
received under a contract. Such provision, if any, is recorded
in the period in which such losses become probable and is
included in the cost of revenues.
Deferred contract costs are upfront costs incurred for the
contract and are amortized on a systematic basis that is
consistent with the transfer to the customer of the goods
or services to which the asset relates.
Other services - all other revenue is recognised in the
period in which the performance obligation is satisfied over
a period of time or point in time.
Revenue excludes any taxes and duties collected on behalf
of the government.
Dividend income is recognized when the unconditional
right to receive the income is established.
Interest income is recognized on time proportionate method.
Practical expedients used
In accordance with the practical expedient in Para 63 of
Ind AS 115, the Company has not adjusted the promised
amount of consideration for the effects of a significant
financing component if the company expects, at contract
inception, that the period between when the company
transfers a promised good or service to a customer and
when the customer pays for that good or service will be
one year or less.
;) Property, plant and equipment
Property, plant and equipment are stated at cost of
acquisition less accumulated depreciation and accumulated
impairment loss, if any. The cost is inclusive of freight,
installation cost, duties, taxes, borrowing cost and other
incidental expenses for bringing the asset to its working
conditions for its intended use but net of indirect taxes,
wherever input credit is claimed.
Advances paid towards the acquisition of property, plant
and equipment outstanding at each balance sheet date
is classified as capital advances under other non-current
assets and the cost of assets not put to use before such
date are disclosed under 'Capital work-in-progress'.
When material parts of property, plant and equipment are
required to be replaced in intervals, the company recognizes
such parts as separate component of assets with specific
useful lives and provides depreciation over their useful life.
Subsequent costs are included in the asset's carrying
amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits
associated with the item will flow to the company and the
cost of the item can be measured reliably.
Repairs and maintenance costs are recognized in the
statement of profit and loss when incurred.
The cost of an item of property, plant and equipment
shall be recognised as an asset if, and only if it is probable
that future economic benefits associated with the item
will flow to the Company and the cost of the item can be
measured reliably.
The cost and related accumulated depreciation are
eliminated from the standalone financial statements upon
sale or retirement of the asset and the resultant gains or
losses are recognized in the statement of profit and loss.
Assets to be disposed off are reported at the lower of the
carrying value or the fair value less cost to sell.
f) Leases
The Company as a lessee
The Company lease asset classes primarily consist of leases
for premise. The Company assesses whether a contract
contains a lease, at inception of a contract. A contract is,
or contains, a lease if the contract conveys the right to
control the use of an identified asset for a period of time in
exchange for consideration. To assess whether a contract
conveys the right to control the use of an identified asset,
the Company assesses whether:
(i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic
benefits from use of the asset through the period
of the lease and
(iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the company
recognizes a right-of-use asset ("ROU") and a corresponding
lease liability for all lease arrangements in which it is a
lessee, except for leases with a term of twelve months or
less (short-term leases) and low value leases. For these
short-term and low value leases, the company recognizes
the lease payments as an operating expense on a straight¬
line basis over the term of the lease.
At inception of a contract, the company assesses whether
a contract is, or contains, a lease. A contract is, or contains,
a lease if the contract conveys the right to control the use
of an identified asset for a period of time in exchange for
consideration. The company recognises right-of-use asset
representing its right to use the underlying asset for the
lease term at the lease commencement date. The cost of the
right-of-use asset measured at inception shall comprise of
the amount of the initial measurement of the lease liability
adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred
and an estimate of costs to be incurred by the lessee in
dismantling and removing the underlying asset or restoring
the underlying asset or site on which it is located. The
right-of-use assets is subsequently measured at cost less
any accumulated depreciation, accumulated impairment
losses, if any and adjusted for any remeasurement of the
lease liability. The right-of-use assets is depreciated using
the straight -line method from the commencement date
over the lease term.
The company measures the lease liability at the present
value of the lease payments that are not paid at the
commencement date of the lease. The lease payments are
discounted using the incremental borrowing rate. Lease
liabilities are remeasured with a corresponding adjustment
to the related right of use asset if the company changes
its assessment if whether it will exercise an extension or a
termination option. The estimated useful lives of right-of-
use assets are determined on the same basis as those of
the underlying property and equipment.
Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments have
been classified as financing cash flows.
Short-term leases and leases of low-value assets : The
Company has elected not to recognise right-of-use assets
and lease liabilities for leases of low-value assets and short¬
term leases. The Company recognises the lease payments
associated with these leases as an expense in profit or loss.
g) Depreciation and amortisation
Depreciation is charged so as to write off the cost, other
than land and properties under construction, over their
estimated useful lives, using the straight-line method.
Depreciation on additions / deletions is provided on pro-rata
basis from the date of acquisition/ up to the date of deletion
Depreciation on assets is provided on the straight-line
method using the rates based on the economic useful
life of assets as estimated by the management but not
being more than the limits specified in Schedule II of the
Companies Act, 2013 as below :
Computer Software is amortized over a period of 4 years.
Depreciation is not recorded on capital work-in-progress
until installation is complete and the asset is ready for its
intended use. The estimated useful lives, residual values
and depreciation method are reviewed at each year end,
with the effect of any changes in estimate accounted for on
a prospective basis.
On the subsequent sale or retirement of a revalued
property, the attributable revaluation surplus remaining in
the property revaluation reserve is transferred directly to
retained earnings. No transfer is made from the revaluation
reserve to retained earnings except when an asset
is derecognised.
h) Other Intangible assets
Intangible assets comprising of software are recorded
at acquisition cost and are amortized over the estimated
useful life on straight line basis. Cost of development and
production incurred till the time software is ready for use
is capitalised.
Gains or losses arising from derecognition of an intangible
asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and
are recognised in the statement of profit or loss when the
asset is derecognised.
Research cost are expensed as incurred.
Development costs
Development expenditures on an individual project are
recognised as an intangible asset when the company
can demonstrate:
- The technical feasibility of completing the intangible
asset so that the asset will be available for use
- Its intention to complete and its ability and intention
to use the asset
- How the asset will generate future economic benefits
- The ability to measure reliably the expenditure
during development
Following initial recognition of the development
expenditure as an asset, the asset is carried at cost less any
accumulated amortisation and accumulated impairment
losses. Amortisation of the asset begins when development
is complete and the asset is available for use. It is amortised
over the period of expected future benefit. Amortisation
expense is recognised in the statement of profit and loss
unless such expenditure forms part of carrying value of
another asset. During the period of development, the
asset is tested for impairment annually or at the end
of reporting period where there exists an indication of
impairment. Subsequent expenditure is capitalised only
when it increases the future economic benefits embodied
in the specific asset to which it relates, and the cost of the
asset can be measured reliably. All other expenditure is
recognised in profit or loss as incurred.
i) Impairment of tangible and intangible assets
At each reporting date, the company reviews the carrying
amounts of its tangible and intangible assets, to determine
whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in
order to determine the extent of the impairment loss (if
any). Where it is not possible to estimate the recoverable
amount of an individual asset, the company estimates the
recoverable amount of the cash-generating unit to which
the asset belongs.
If the recoverable amount of an asset is estimated to be less
than its carrying amount, the carrying amount of the asset
is reduced to its recoverable amount. An impairment loss is
recognised as an expense immediately, unless the relevant
asset is carried at a revalued amount, in which case the
impairment loss is treated as a revaluation decrease. Where
an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate
of its recoverable amount, but so that the increased
carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss
been recognised for the asset in prior years. A reversal of
an impairment loss is recognised as income immediately,
unless the relevant asset is carried at a revalued amount, in
which case the reversal of the impairment loss is treated as
a revaluation increase.
j) Foreign currency transactions and translation
Transactions and translations
Transactions in foreign currencies are initially recorded at
the functional currency rate prevailing at the date of the
transaction. Monetary assets and liabilities denominated in
foreign currencies are translated into the respective functional
currency at the rates prevailing on the reporting period date.
Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation
at reporting period-end date exchange rates of monetary
assets and liabilities denominated in foreign currencies are
recognised in the income statement.
Non-monetary items that are measured at fair value in a
foreign currency shall be translated using the exchange
rates at the date when the fair value was measured. Non¬
monetary items that are measured in terms of historical
cost in a foreign currency shall be translated using the
exchange rate at the date of the transaction.
k) Employee benefit costs
• Short- term employee benefits
All employee benefits payable wholly within twelve
months of rendering the service are classified as short¬
term employee benefits. Benefits such as salaries,
wages etc. and the expected cost of ex-gratia are
recognised in the year in which the employee renders
the related service. A liability is recognised for the
amount expected to be paid when there is a present
legal or constructive obligation to pay this amount as
a result of past service provided by the employee and
the obligation can be estimated reliably.
• Post-Employment benefits
Defined Contribution plans
Provident Fund: Employees are entitled to receive
benefits in respect of provident fund, in which
both employees and the company make monthly
contributions at a specified percentage of the
covered employees' salary. The contributions, as
specified under the law were made to Recognised
Provident Fund.
Superannuation: Certain employees of the company
are participants in a defined contribution plan. The
company has no further obligations to the Plan
beyond its annual contributions which are contributed
to a trust fund, the corpus of which is invested with
the Life Insurance Corporation of India.
National Pension Scheme (NPS): Certain employees of
the Company have opted to subscribe and contribute
to National Pension Scheme (NPS), a defined
contribution plan administered by the Government of
India. Individual employees can determine the amount
to be contributed towards NPS. The Company's
contribution to NPS for the year is charged as an
expense in the Statement of profit and loss when
services are rendered by the employees and based on
the amount of contribution required to be made.
Obligations for contributions to defined contribution
plan are expensed as an employee benefits expense
in the statement of profit and loss in period in which
the related service is provided by the employee.
Prepaid contributions are recognised as an asset to
the extent that a cash refund or a reduction in future
payments is available.
Defined benefit plan
Gratuity: The company provides for gratuity, a defined
benefit retirement plan ('the Gratuity Plan') covering
eligible employees. The Gratuity Plan provides a lump¬
sum payment to vested employees at retirement,
death, incapacitation or termination of employment, of
an amount based on the respective employee's salary
and the tenure of employment with the company.
The company has maintained a company Gratuity
Cum Life Assurance Scheme with the Life Insurance
Corporation of India (LIC) towards which it annually
contributes a sum determined by LIC.
The company's net obligation in respect of the gratuity
benefit scheme is calculated by estimating the amount
of future benefit that employees have earned in return
for their service in the current and prior periods; that
benefit is discounted to determine its present value,
and the fair value of any plan assets is deducted. The
present value of the obligation under such defined
benefit plan is determined based on actuarial valuation
performed annually by an independent actuary using
the Projected Unit Credit Method, which recognises
each year of service as giving rise to additional unit of
employee benefit entitlement and measures each unit
separately to build up the final obligation.
The obligation is measured at the present value of the
estimated future cash flows. The discount rates used
for determining the present value of the obligation
under defined benefit plan are based on the market
yields on Government securities as at the balance
sheet date. The company recognises the net obligation
of a defined benefit plan in its balance sheet as an
asset or liability.
Gains or losses through re-measurement of the net
defined benefit liability / (asset) are recognised in other
comprehensive income. The actual return of portfolio
of plan assets, in excess of yields computed by applying
the discount rate used to measure the defined benefit
obligation are recognised in other comprehensive
income. The effects of any plan amendments are
recognised in statement of profit and loss.
Compensated absences: The company has a policy on
compensated absences which are both accumulating
and non-accumulating in nature. The expected cost of
accumulating compensated absences is determined
by actuarial valuation performed by an independent
actuary at each balance sheet date using projected unit
credit method on the additional amount expected to
be paid/availed as a result of the unused entitlement
that has accumulated at the balance sheet date.
Expense on non-accumulating compensated absences
is recognized in the year in which the absences occur.
l) Income Tax
Income tax expense comprises current and deferred
income tax. Income tax expense is recognized in net profit
in the statement of profit and loss except to the extent that
it relates to items recognized directly in equity, in which
case it is recognized in other comprehensive income.
Current tax
Current income tax for current and prior periods is
recognized at the amount expected to be paid to or
recovered from the tax authorities, using the tax rates and
tax laws that have been enacted or substantively enacted
by the balance sheet date. Current tax assets and current
tax liabilities are offset only if there is a legally enforceable
right to set off the recognized amounts, and it is intended
to realise the asset and settle the liability on a net basis or
simultaneously.
Deferred tax
Deferred tax is recognised on the differences between the
carrying amounts of assets and liabilities in the standalone
financial statements and the corresponding tax bases
used in the computation of taxable profit. Deferred tax
liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to
the extent that it is probable that taxable profits will be
available against which deductible temporary differences
can be utilised.
Deferred tax is not recognised for temporary differences
on the initial recognition of assets and liabilities in a
transaction that:
- Is not a business combination; and
- At the time of transaction (i) affects neither accounting
nor taxable profit or loss and (ii) does not give rise to
equal taxable and deductible temporary differences
The carrying amount of deferred tax assets is reviewed at
the end of each reporting year and reduced to the extent
that it is no longer probable that sufficient taxable profits will
be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected
to apply in the year when the liability is settled or the asset
realised based on the tax rates (and tax laws) that have
been enacted or substantively enacted by the end of the
reporting year.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes
levied by the same taxation authority and the company
intends to settle its current tax assets and liabilities
on a net basis.
Current and deferred tax are recognised as an expense
or income in profit or loss, except when they relate to
items credited or debited outside profit or loss (either
in other comprehensive income or directly in equity),
in which case the tax is also recognised outside profit or
loss (either in other comprehensive income or directly in
equity, respectively).
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