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Accroding to Indian Company Act, How Net profit can be calculated?

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Accroding to Indian Company Act, How Net profit can be calculated?
posted Apr 13, 2016 by Shantanu Arora

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1 Answer

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**Net profit after tax***

Add : Allowed Credits
1 Profit on sale of immovable property
( Original Cost – WDV )

Less : Credits Disallowed
1 Premium on shares or debentures
2 Profit on sale of forfeited shares
3 Profit on sale of immovable property
(Sale Value of Immovable Property – Original Cost )
4 Surplus in P&L on measurement of asset or liability at fair value

Less : Expenses Allowed
1 All the usual Working Charges
2 Director’s Remuneration
3 Bonus or Commission paid to Staff
4 Tax on escess or abnormal profits
5 Tax on business profits imposed for special reasons
6 Interest on Debentures
7 Interest on Loans
8 Expenses on repairs ( other than Capital Expenditure )
9 Contributions made under section 181 ( Bonafide Charitable Trusts )
10 Depreciation
11 Prior period items
12 Legal liability for compensation or damages
13 Insurance Expenses

Add : Expenses Disallowed
1 Income Tax
2 Compensations, damages or payments made voluntarily
3 Capital Loss on sale of undertaking or part thereof ( Not include losses on sale of asset )
4 Expenditure in P&L on measurement of asset or liability at fair value

  • Net profit after tax is taken as base and accordingly the adjustments need to be considered.
answer Jun 22, 2017 by Prachi
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