annual-report-FY2020

325 MAHINDRA & MAHINDRA LTD. INTEGRATED ANNUAL REPORT 2019-20 c) The reconciliation of estimated income tax expense at tax rate to income tax expense reported in profit or loss is as follows: Rupees crores Particulars 2020 2019 Profit Before Tax .............................................................................................................................................. 1,654.61 8,870.84 Applicable Income Tax rate............................................................................................................................. 25.17% 34.94% Expected Income Tax expense......................................................................................................................... 416.43 3,099.83 Tax effect of adjustments to reconcile expected income tax expense to reported income tax expense: Effect of different tax rates in local and foreign tax jurisdictions.............................................................. 178.76 271.18 Effect of change in tax rate due to switch to new tax regime #................................................................ 871.72 — Effect of income exempt from tax/non taxable on compliance of conditions ......................................... (177.32) (648.68) Effect of expenses/provisions that is non-deductible in determining taxable profit ............................... 705.55 194.99 Effect of concessions (R&D and other allowances)....................................................................................... — (102.15) Effect of unused tax losses & tax offsets for which no deferred tax asset has been recognised ........... 939.17 538.58 Effect of utilisation/(recognition) of deferred tax on capital losses............................................................ 27.30 (116.20) Reversal on account of amendment in tax laws *........................................................................................ (1,292.38) — Effect of net additional/(reversal) of provision in respect of prior years .................................................. 436.65 (396.72) Others................................................................................................................................................................ (130.27) 13.16 Income tax expense recognised in profit or loss .......................................................................................... 1,975.61 2,853.99 * During the year ended 31 st March, 2020, the Government of India vide Finance Act, 2020 has abolished Dividend Distribution Tax, pursuant to which deferred tax liabilities of Rs. 1,292.38 crores relating to undistributed profit of certain associates have been reversed. # During the year ended 31 st March, 2020, the Government of India, vide Taxation Laws (Amendment) Tax Ordinance, 2019 has provided an option to the domestic companies to switch to a lower tax rate structure of 22% (25.168% including surcharge and cesses) from the earlier tax rate of 30% (34.944% including surcharge and cesses) subject to condition that the Company will not avail any of the specified deductions/incentives under the Income Tax Act. The Company and many of its group companies have elected to switch to the new lower tax rate structure with effect from the financial year 2019-2020. Consequently, net impact of Rs. 871.72 crores has been recognised in the statement of profit and loss on account of expensing of MAT credit balance and offset by tax credit on account of restatement of net deferred tax liabilities at the beginning of the year. d) Amounts on which deferred tax asset has not been created and related expiry period Deferred tax assets have not been recognised in respect of following items, because it is not probable that future taxable profit will be available against which the Group can use the benefit therefrom. Rupees crores Particulars 2020 2019 Deductible Temporary differences (no expiry date)...................................................................................... 831.06 977.80 Unused tax losses (revenue in nature)........................................................................................................... 11,894.29 13,104.37 Unused tax losses (capital in nature).............................................................................................................. 15.26 19.40 Unused tax credits............................................................................................................................................ 164.98 148.30 Total ................................................................................................................................................................... 12,905.59 14,249.87 Unused Tax losses - Revenue in nature Rupees crores Particulars 2020 2019 Expiry period Up to Five Years............................................................................................................................................... 4,258.67 7,587.30 More than Five Years....................................................................................................................................... 5,293.40 3,042.80 No Expiry Date.................................................................................................................................................. 2,342.22 2,474.27 Total ................................................................................................................................................................... 11,894.29 13,104.37 11. Current Tax and Deferred Tax (contd.)