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The one-time hit pertains to the withdrawal of the indexation benefits while calculating Long-term Capital Gains on debt mutual funds, which were purchased prior to April 1, 2023 during Budget 2024.
Maruti Suzuki stated that it was making accounting provisions for deferred tax liability on fair value gains on these investments in compliance with Ind AS-12. Now, due to the withdrawal of the indexation benefit and a change in tax rate from 20% plus surcharge and cess to 12.5% plus surcharge and cess without indexation, the accounting provision for the deferred tax liability will have to be restated.
The passenger car maker also said that the payment of tax would be made at the time of redeeming these funds and that the amount of tax may differ from the original amount of ₹850 crore, based on the actual gain and actual applicable tax rate at the time of redeeming these funds.
For the June quarter, Maruti Suzuki had a consolidated deferred tax expense of ₹103.7 crore as per its P&L statement.
“This is not related to operations and will not Impact our operational Profit. It will affect the Tax on Other Income in respective future dates whenever we redeem those funds,” Chief Investor Relations officer Rahul Bharti said.
Maruti Suzuki’s net profit for the quarter increased by 47% year-on-year to ₹3,650 crore, which turned out to be higher than the CNBC-TV18 poll of ₹3,272 crore.
Revenue for the quarter also increased by 10% from the year-ago quarter to ₹35,531 crore, which was also higher than the estimate of ₹34,565 crore.
EBITDA margin for the quarter expanded by nearly 350 basis points to 12.5% from 9.2% in the base quarter. Maruti Suzuki’s margins were expected to rise by 220 basis points on account of a lower base and due to low raw material costs.
Shares of Maruti Suzuki India ended little changed on Friday at ₹12,207. The stock has risen nearly 20% so far in 2024.
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