Note 1 - Corporate Information
The Company was incorporated as "Sigma Solve IT Tech Private Limited" at Ahmedabad on April 29, 2010,
under the provisions of the Companies Act, 1956 vide certificate of incorporation issued by the Assistant
Registrar of Companies, Gujarat, Dadra and Nagar Haveli. Later on, the name of our Company was changed
from "Sigma Solve IT Tech Private Limited" to "Presha Software Private Limited" and certificate to that
effect was issued by Assistant Registrar of Companies, Registrar of Companies, Ahmedabad on February
18, 2017. Subsequently, the name of Company was changed from "Presha Software Private Limited" to
"Sigma Solve Private Limited" and certificate to that effect was issued by Registrar of Companies,
Ahmedabad on March 7, 2019. Consequent up on the conversion of Company from Private Limited Company
to Public Limited Company, the name of our Company was changed to "Sigma Solve Limited" (“The
Company”) and fresh Certificate of Incorporation consequent up on the conversion from Private Limited
Company to Public Limited Company dated June 17, 2019, was issued by the Registrar of Companies, ROC
- Ahmedabad. The Corporate Identification Number of our Company is L72200GJ2010PLC060478.
The Company is primarily engaged in Information and Information Enabled Services.
Authorization of financial statements
The Financial Statements (the financial statements) were approved and authorized for issue in accordance
with a resolution passed in Board of Directors meeting held on 23rd May 2025.
Note 2 - Material Accounting Policies Information
This note provides a list of the material accounting policies adopted in the preparation of these Financial
Statements. Accounting policies have been consistently applied to all the years presented except where a
newly issued accounting standard is initially adopted or a revision to an existing accounting standard
requires a change in the accounting policy hitherto in use.
(a) Basis of Compliance
The Financial Statements have been prepared in accordance and comply in all material aspects with Indian
Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) read with
Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued
thereafter from time to time.
(b) Basis of Preparation of Financial Statement
These standalone financial statements have been prepared as a going concern on accrual basis of
accounting using historical cost basis except for certain financial instruments i.e. investments in Mutual
Funds are measured at fair value or amortized cost at the end of each reporting period. 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.
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 realization in cash and cash equivalents of the consideration for such
services rendered, the Company has considered an operating cycle of 12 months.
(c) Use of estimates and judgements
The preparation of the Standalone Financial Statements requires management to make estimates,
assumptions and judgments that affect the reported balances of assets and liabilities and disclosures as at
the date of the Financial Statements and the reported amounts of income and expense for the periods
presented. The estimates and associated assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may differ from these estimates considering different
assumptions and conditions.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimates are revised and future periods are affected.
(d) Property, Plant and Equipment and Intangible Assets
Property, Plant and Equipment are stated at cost of acquisition/construction net of recoverable taxes and
less accumulated depreciation/amortization and impairment loss, if any. Cost includes cost of acquisition,
construction, installation, borrowing cost and any cost directly attributable to bringing the assets to its
working condition for its intended use, net of recoverable taxes. The Company capitalizes to project assets
all the cost directly attributable and ascertainable, to completing the project.
All other repairs and maintenance are charged to profit or loss during the reporting period in which they
are incurred. If significant parts of an item of property, plant and equipment have different useful lives,
then they are accounted for as separate items (major components) of property, plant and equipment. The
carrying amount of any component accounted for as a separate asset is de-recognized when replaced.
Any item of property, plant and equipment is derecognized upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is
charged to revenue in the Statement of Profit and Loss when the asset is derecognized.
Capital work in Progress under development
Projects under commissioning and other CWIP under development are carried at cost, comprising direct
cost, related incidental expenses and attributable borrowing cost.
Subsequent expenditures relating to property, plant and equipment are capitalized only when it is probable
that future economic benefit associated with these will flow to the Company and the cost of the item can
be measured reliably. Advances given to acquire property, plant and equipment are recorded as non¬
current assets and subsequently transferred to CWIP on acquisition of related assets.
Intangible assets
Intangible assets with finite useful lives are carried at cost less accumulated amortization and impairment
losses, if any. Intangible assets with indefinite useful lives that are acquired separately are carried at cost
less accumulated impairment losses. The cost of an intangible asset comprises its purchase price, including
any import duties and other taxes (other than those subsequently recoverable from the tax authorities),
and any directly attributable expenditure on making the asset ready for its intended use and net of any
trade discounts and rebates. Subsequent expenditure on an intangible asset after its purchase / completion
is recognized as an expense when incurred unless it is probable that such expenditure will enable the asset
to generate future economic benefits in excess of its originally assessed standards of performance and such
Expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added
to the cost of the asset.
Depreciation, Estimated Useful Lives and Residual Values
Depreciation is calculated to systematically allocate the cost of property, plant and equipment and
intangible assets net of the estimated residual values over the estimated useful life. Freehold land is not
depreciated. Depreciation on property, plant and equipment is provided using Written down Value method
over the useful life of assets, which is as stated in Schedule II of Companies Act, 2013 or based on the
certificate of technical engineers as accepted by the Management of Company. Intangible assets are
amortized over their respective individual estimated useful life on a Straight-Line Method commencing from
the date the asset is available to the Company for its use. The management estimates the useful life as
follows: -
* For these classes of assets, based on internal assessment and independent technical evaluation carried
out by external valuers, the Management believes that the useful lives as given above best represent the
period over which the Management expects to use these assets.
The management believes that above useful lives are realistic and reflect fair approximation of the period
over which the assets are likely to be used. The useful lives and residual values are reviewed by the
management at each financial year end and revised, if appropriate. In case of a revision, the unamortized
depreciable amount (remaining net value of assets) is charged over the revised remaining useful lives.
The residual values, useful lives and methods of depreciation of property, plant and equipment (PPE) /
intangible assets are reviewed at the end of each financial year and adjusted prospectively if appropriate.
Depreciation on items of property, plant and equipment acquired / disposed off during the year is provided
on pro-rata basis with reference to the date of addition / disposal.
(e) Impairment of non-financial assets
For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash
inflows from continuing use that are largely independent of the cash inflows from other assets or groups of
assets is considered as a cash generating unit ("CGU"). The carrying values of assets / CGU at each Balance
sheet date are reviewed to determine whether there is any indication that an asset may be impaired. If
any indication of such impairment exists, the recoverable amount of such assets / CGU is estimated and in
case the carrying amount of these assets exceeds their recoverable amount, an impairment loss is
recognized in the Statement of Profit and Loss. The recoverable amount is the higher of the net selling
price and their value in use. Value in use is arrived at by discounting the future Cash Flows to their present
value based on an appropriate discount factor. Assessment is also done at each Balance sheet date as to
whether there is indication that an impairment loss recognized for an asset in prior accounting periods no
longer exists or may have decreased, consequent to which such reversal of impairment loss is recognized
in the Statement of Profit and Loss.
(f) Investment in subsidiaries, joint venture and associates
Investments in subsidiaries, joint venture and associates are carried at cost less accumulated impairment
losses, if any. Cost includes the purchase price and other costs directly attributable to the acquisition of
investments. On disposal of investments in subsidiaries, joint venture and associates, the difference
between net disposal proceeds and the carrying amounts are recognized in the Statement of Profit and
Loss.
(g) Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability
or equity instrument of another entity.
Financial Asset
Initial recognition and measurement
A financial asset is recognized in the Balance Sheet when the Company becomes party to the contractual
provisions of the instrument. At initial recognition, the Company measures a financial asset at its fair value
plus or minus, in the case of a financial asset not measured at fair value through profit or loss, transaction
costs that are directly attributable to the acquisition or issue of the financial asset except trade receivables
(not containing significant financing component) are measured at transaction price.
Subsequent measurement
For purpose of subsequent measurement, financial assets are classified as under:
- Financial assets measured at amortized cost;
- Financial assets measured at fair value through profit or loss (FVTPL); and
- Financial assets measured at fair value through other comprehensive income (FVTOCI).
The Company classifies its financial assets in the above-mentioned categories based on:
- The Company's business model for managing the financial assets, and
- The contractual cash flows characteristics of the financial asset.
A financial asset is measured at amortized cost if both of the following conditions are met:
- The financial asset is held within a business model whose objective is to hold financial assets in
order to collect contractual cash flows and
- The contractual terms of the financial assets give rise on specified dates to cash flows that are
solely payments of principal and interest (SPPI) on the principal amount outstanding.
Financial assets are subsequently measured at amortized cost using the effective interest rate (EIR)
method. Amortized cost is calculated by considering any discount or premium on acquisition and fees or
costs that are an integral part of the EIR. The EIR amortization is included in finance income in the profit
or loss. A gain or loss on a debt investment that is subsequently measured at amortized cost is recognized
in the Statement of Profit and Loss when the asset is derecognized or impaired.
A financial asset is measured at fair value through other comprehensive income if both of the following
conditions are met:
- The financial asset is held within a business model whose objective is achieved by both collecting
the contractual cash flows and selling financial assets and
- The assets' contractual cash flows represent SPPI.
A financial asset is measured at fair value through profit or loss unless it is measured at amortized cost or
at fair value through other comprehensive income. In addition, the Company may elect to designate a
financial asset, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL.
However, such election is allowed only if doing so reduces or eliminates a measurement or recognition
inconsistency (referred to as 'accounting mismatch').
Equity Investments
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are
held for trading are classified as at FVTPL. For all other equity instruments, the Company may make an
irrevocable election to present in other comprehensive income subsequent changes in the fair value. The
Company makes such election on an instrument by-instrument basis. The classification is made on initial
recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the
instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI
to P&L, even on sale of investment. However, the Company may transfer the cumulative gain or loss within
equity. Equity instruments included within the FVTPL category are measured at fair value with all changes
recognized in the P&L.
For debt instrument, movements in the carrying amount are recorded through OCI, except for the
recognition of impairment gains or losses, interest revenue and foreign exchange gains or losses which are
recognized in the Statement of Profit and Loss. When the financial asset is derecognized, the cumulative
gain or loss previously recognized in OCI is reclassified from equity to the Statement of Profit and Loss.
Interest income from these financial assets is included in other income using the EIR method.
Derivatives
The Company uses derivative financial instruments i.e. forward contracts, swaps, commodity hedging
contracts and option contracts, to hedge its price fluctuation risk, foreign exchange risk and interest rate
risk. Such derivative financial instruments are initially recognised at fair values on the date on which a
derivatives contract is entered into and are subsequently re-measured at fair value. Derivatives are carried
as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in fair value of derivatives are taken directly to the statement of
Profit and Loss.
De-recognition
A financial asset is derecognized only when the Company:
- has transferred the rights to receive Cash Flows from the financial asset; or
- Retains the contractual rights to receive the Cash Flows of the financial asset but assumes a
contractual obligation to pay the Cash Flows to one or more recipients.
Where the Company transfers an asset, it evaluates whether it has transferred substantially all risks and
rewards of ownership of the financial asset. Where the Company has transferred substantially all risks and
rewards of ownership, the financial asset is derecognized. Where the Company has not transferred
substantially all risks and rewards of ownership of the financial asset, the financial asset is not
derecognized. Where the Company has neither transferred a financial asset nor retained substantially all
risks and rewards of ownership of the financial asset, the financial asset is derecognized if the Company
has not retained control of the financial asset. Where the Company retains control of the financial asset,
the asset is continued to be recognized to the extent of continuing involvement in the financial asset.
Impairment of Financial Assets
The Company assesses impairment based on expected credit loss (ECL) model to the following:
- Financial assets measured at amortized cost
- Financial assets measured at fair value through other comprehensive income
Expected credit losses are measured through a loss allowance at an amount equal to:
- The 12-months expected credit losses (expected credit losses that result from those default events
on the financial instrument that are possible within 12 months after the reporting date); or
- Life time expected credit losses (expected credit losses that result from all possible default events
over the life of the financial instrument).
The Company follows 'simplified approach' for recognition of impairment loss allowance on trade receivables
or contract revenue receivables. Under the simplified approach, the Company is not required to track
changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each
reporting date, right from its initial recognition.
The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade
receivables. The provision matrix is based on its historically observed default rates over the expected life
of the trade receivable and is adjusted for forward looking estimates. At every reporting date, the historical
observed default rates are updated and changes in the forward-looking estimates are analyzed.
Leases
The Company assess whether a contract contains a lease, at the inception of the 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 identified asset; (ii) the
Company has substantially all of the economic benefits from the use of the asset through the period of
lease and (iii) the Company has right to direct the use of the asset.
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116.
The Company uses judgement in assessing the lease term (including anticipated renewals / termination
options).
Short-term leases and leases of low-value assets:
The Company has applied the recognition exemption for short term leases that have a lease term of less
than or equal to 12 months with no purchase option and assets with low value. The Company recognizes
the lease payments associated with these leases as an expense in Standalone Statement of Profit and Loss
over the lease term.
Financial Liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities measured at fair value through
profit or loss and financial liabilities measured at amortized cost as appropriate. All financial liabilities are
recognized initially at fair value and, in case of loans and borrowings and payables, net of directly
attributable transaction costs. The Company's financial liabilities include trade and other payables and loan
and borrowings.
Subsequent measurement
- Financial liabilities measured at amortized cost
- Financial liabilities subsequently measured at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are
classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or
losses on liabilities held for trading are recognized in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as
such at the initial date of recognition, and only if the criteria in Ind AS 109 - Financial Instruments are
satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit
risk are recognized in OCI. These gains / losses are not subsequently transferred to P&L. However, the
Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such
liability are recognized in the Statement of Profit and Loss.
The Company has not designated any financial liability as at fair value through profit and loss. After initial
recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the
Effective Interest Rate (EIR) method. The effective interest rate is the rate that exactly discounts estimated
future cash payments through the expected life of the financial liability, or, where appropriate, a shorter
period. The EIR amortization is included as finance costs in the Statement of Profit and Loss. Changes to
the carrying amount of a financial liability as a result of renegotiation or modification of terms that do not
result in derecognition of the financial liability, is recognized in the Statement of Profit and Loss.
De-recognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original liability and the recognition of a new liability.
The difference in the respective carrying amounts is recognized in the Statement of Profit and Loss.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the Balance Sheet where there
is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net
basis or realize the asset and settle the liability simultaneously.
Fair Value Measurement
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. The fair value measurement is based
on the presumption that the transaction to sell the asset or transfer the liability takes place either:
(i) In the principal market for the asset or liability, or
(ii) In the absence of a principal market, in the most advantageous market for the asset or liability.
The fair value of an asset or a liability is measured using the assumptions that market participants would
use when pricing the asset or liability, if market participants act in their best economic interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing
the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the Financial Statements are
categorized within the fair value hierarchy, described as under, based on the lowest level input that is
significant to the fair value measurement as a whole:
- Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable.
- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
(h) Employee Benefits
Employee benefits consist of provident fund, gratuity fund, and other short-term employee benefits.
Post-Employment Benefit Plans
Defined Contribution Plan:
Contribution towards provident fund for eligible employees are accrued in accordance with applicable
statutes and deposited with the regulatory provident fund authorities (Government administered provident
fund scheme). The Company does not carry any other obligation apart from the monthly contribution. The
Company's contribution is recognized as an expense in the Statement of Profit and Loss during the period
in which the employee renders the related service.
Defined Benefit Plan:
The Company provides for gratuity, a defined benefit plan covering eligible employees in accordance with
the Payment of Gratuity Act, 1972. The cost of providing benefits is actuarially determined using the
projected unit credit method, with actuarial valuations being carried out at each Balance sheet date.
The retirement benefit obligation recognized in the Balance Sheet represents the present value of the
defined benefit obligation as reduced by the fair value of scheme assets. The present value of the said
obligation is determined by discounting the estimated future cash outflows, using market yields of
government bonds of equivalent term and currency to the liability.
The interest income / (expense) are calculated by applying the discount rate to the net defined benefit
liability or asset. The net interest income / (expense) on the net defined benefit liability is recognized in
the Statement of Profit and Loss.
Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling (if any), are
recognized immediately in the Balance Sheet with a corresponding charge or credit to retained earnings
through OCI in the period in which they occur. Remeasurements are not reclassified to the Statement of
Profit and Loss in subsequent periods.
Changes in the present value of the defined benefit obligation resulting from plan amendments or
curtailments are recognized immediately in the Statement of Profit and Loss as past service cost.
Long Term Employee Benefits:
The liability in respect of accrued leave benefits which are expected to be availed or en-cashed beyond 12
months from the end of the year, is treated as long term employee benefits. The Company's liability is
actuarially determined by qualified actuary at Balance Sheet date by using the Projected Unit Credit
method. Actuarial losses/ gains are recognized in the Statement of Profit and Loss in the year in which they
arise.
Short Term Employee Benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for services
rendered by employees is recognized during the period when the employee renders the services. Short
term employee benefits include salary and wages, bonus, incentive and ex-gratia and also include accrued
leave benefits, which are expected to be availed or en-cashed within 12 months from the end of the year.
(i) Investments in subsidiaries and associates
Equity investments in subsidiaries are stated at cost less impairment as per Ind AS 27. The Company tests
these investments for impairment in accordance with the policy applicable to 'Impairment of non-financial
assets'. Where the carrying amount of an investment or CGU to which the investment relates is greater
than its estimated recoverable amount, it is written down immediately to its recoverable amount and the
difference is recognized in the Statement of Profit and Loss.
Profit/loss on sale of investments are recognized on the date of the transaction of sale and are computed
with reference to the original cost of the investment sold.
(j) Borrowing
Borrowings are initially recognized at fair value, net of transaction costs incurred. Interest bearing loans
are subsequently measured at amortized cost by using the effective interest method (EIR method). Any
difference between the proceeds (net of transaction costs) and the redemption amount is recognized in
profit or loss over the period of borrowing using the effective interest method (EIR). The EIR Amortization
is included as Finance Costs in the Statement of Profit and Loss.
Borrowings are derecognized from the Balance Sheet when the obligation specified in the contract is
discharged, cancelled or expired. The difference between the carrying amount of a financial liability that
has been extinguished or transferred to another party and the consideration paid, including any non-cash
assets transferred or liabilities assumed, is recognized in profit or loss as other income or other expenses.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer
settlement of the liability for at least 12 months after the reporting period.
(k) Borrowing Cost
Borrowing costs include interest and amortization of ancillary costs incurred to the extent they are regarded
as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not
directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over
the tenure of the loan. Borrowing costs, allocated to and utilized for qualifying assets, pertaining to the
period from commencement of activities relating to construction/ development of the qualifying asset up
to the date of capitalization of such asset are added to the cost of the assets. Any income earned on the
temporary deployment/ investment of those borrowings is deducted from the borrowing costs so incurred.
Capitalization of borrowing costs is suspended and charged to the Statement of Profit and Loss during
extended periods when active development activity on the qualifying assets is interrupted. A qualifying
asset is one that necessarily takes a substantial period of time to get ready for its intended use.
(l) Foreign Currency Transactions
Items included in the Financial Statements are measured using the currency of the primary economic
environment in which the Company operates ('the functional currency'). The Financial Statements are
presented in Indian rupee (INR), which is the functional and presentation currency of the Company.
Foreign currency transactions are translated into the functional currency using the exchange rates at the
date of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation of monetary assets and liabilities denominated in foreign currencies
at the year-end exchange rates are generally recognized in profit or loss. All foreign exchange gains and
losses are presented in the Statement of Profit and Loss on a net basis within other income or other
expenses. Non-monetary items that are measured in terms of historical cost in a foreign currency are
translated using the exchange rates at the dates of the initial transactions.
(m) Revenue from Operations
The Company earns primarily from providing services of Information Technology (IT) solutions and
Transaction services.
Revenue from services rendered is recognized when relevant services have been rendered, as per the
agreed terms with the customer, combined with its accounting policies. Revenue is measured based on the
transaction price, which is the consideration, adjusted for volume discounts, service level credits,
performance bonuses, price concessions and incentives, if any, as specified in the contract with the
customer. Revenue also excludes taxes collected from customers.
Revenue from transaction services and other service contracts is recognized based on transactions
processed or manpower deployed.
Other Income:
Interest income is recognized using effective interest rate (EIR) method. Dividend income is recognized,
when the right to receive the dividend is established by the reporting date. Insurance claims are accounted
for on the basis of claims admitted and to the extent that there is no uncertainty in receiving the claims.
(n) Taxation
Income tax expenses comprise current tax (i.e. amount of tax for the period determined in accordance with
the Income Tax Law) and deferred tax charge or credit (reflecting the tax effects of temporary differences
between accounting income and taxable income for the period). Income tax expenses are recognized in
Statement of Profit and Loss except tax expenses related to items recognized directly in reserves (including
other comprehensive income) which are recognized with the underlying items.
Income Taxes
The income tax expense or credit for the period is the tax payable on the current period's taxable income
based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets
and liabilities attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted
at the end of the reporting period i.e. as per the provisions of the Income Tax Act, 1961, as amended from
time to time. Management periodically evaluates positions taken in tax returns with respect to situations
in which applicable tax regulation is subject to interpretation including amount expected to be
paid/recovered for uncertain tax positions. It establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.
Advance taxes and provisions for current income taxes are presented in the Balance Sheet after off-setting
advance tax paid and income tax provision arising in the same tax jurisdiction for relevant tax paying units
and where the Company is able to and intends to settle the asset and liability on a net basis. Current tax
assets and tax liabilities are offset where the Company has a legally enforceable right to offset and intends
either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Deferred Taxes
Deferred tax is provided in full on temporary difference arising between the tax bases of the assets and
liabilities and their carrying amounts in Financial Statements at the reporting date. Deferred tax is
recognized in respect of deductible temporary differences being the difference between taxable income and
accounting income that originate in one period and are capable of reversal in one or more subsequent
periods., the carry forward of unused tax losses and the carry forward of unused tax credits.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially
enacted by the end of the reporting period and are expected to apply when the related deferred income
tax asset is realized or the deferred income tax liability is settled.
Deferred tax assets are recognized for all deductible temporary differences and unused tax losses only if it
is probable that future taxable amounts will be available to utilize those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets and liabilities and when the deferred tax balances relate to the same taxation authority.
Any tax credit available is recognized as deferred tax to the extent that it is probable that future taxable
profit will be available against which the unused tax credits can be utilized. The said asset is created by
way of credit to the Statement of Profit and Loss and shown under the head deferred tax asset.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred
tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are
recognized to the extent that it has become probable that future taxable profits will allow the deferred tax
asset to be recovered.
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