We have observed that there is a big question on applicability of CARO in the minds of students and professionals esp. for a private company.
So we have decoded the applicability quotient in this article. By reading this I hope you will never forget when to apply CARO and when not to. In case you forget, you always know where to come searching right!!!
The first three clauses are very much self-explanatory and does not have much ambiguity in it. But the problem starts with the (iv) applicability for a private limited company.
Lets break this up further
So for a private limited company --> CARO will not be applicable --> when the following conditions are satisfied.
a) Paid up capital + Reserves are not more than Rs.50 Lakhs
b) Loan outstanding from bank of financial institution is not more than Rs.25. Lakhs
c) Turnover does not exceed Rs.5 Crores
Now arises a question whether all the conditions must be satisfied?
Yes, the clauses are cumulative they have used the word 'and' & not 'or'.
Hence, ALL THE CONDITIONS MUST BE SATISFIED FOR CLAIMING EXEMPTION
or EVEN IF ONE CONDITION ABOVE IS NOT SATISFIED CARO IS APPLICABLE.
So we have decoded the applicability quotient in this article. By reading this I hope you will never forget when to apply CARO and when not to. In case you forget, you always know where to come searching right!!!
"This is what CARO 2003 says about applicability"
The first three clauses are very much self-explanatory and does not have much ambiguity in it. But the problem starts with the (iv) applicability for a private limited company.
Lets break this up further
So for a private limited company --> CARO will not be applicable --> when the following conditions are satisfied.
a) Paid up capital + Reserves are not more than Rs.50 Lakhs
b) Loan outstanding from bank of financial institution is not more than Rs.25. Lakhs
c) Turnover does not exceed Rs.5 Crores
Now arises a question whether all the conditions must be satisfied?
Yes, the clauses are cumulative they have used the word 'and' & not 'or'.
Hence, ALL THE CONDITIONS MUST BE SATISFIED FOR CLAIMING EXEMPTION
or EVEN IF ONE CONDITION ABOVE IS NOT SATISFIED CARO IS APPLICABLE.
That takes care of one aspect with regard to all conditions needing to be satisfied - there are now 2 other questions:
ReplyDeletea) the phrase 'at any point of time during the previous FY' applies to all clauses? Or only to the final clause
b) it reads 'loans outstanding'. Does this mean a loan taken and then paid off before the end of the previous year will also be treated as a loan outstanding at any point during the previous year?