Bajaj Auto to Increase Deferred Tax Provision

Bajaj Auto Limited has announced that it will need to increase its provision for deferred tax by Rs 211 crore due to recent changes in tax regulations pertaining to long-term capital gains on debt mutual funds.

The company’s investments in debt mutual funds have resulted in fair value gains, which are subject to deferred tax provisions. The withdrawal of indexation benefits and the change in tax rates have necessitated a reassessment of this provision.

This one-time impact will be reflected in the company’s profit after tax for the second quarter of the current fiscal year. However, it’s important to note that this is primarily an accounting adjustment and will not affect the company’s operational profitability.

The actual tax outflow will occur at the time of redemption of the mutual fund investments. The exact amount of the tax payment may vary depending on the realised gains and the prevailing tax regime at the time of redemption.

Bajaj Auto’s decision to increase the deferred tax provision aligns with applicable accounting standards and the recent changes in tax law. This proactive step demonstrates the company’s commitment to financial transparency and compliance.

Bajaj Auto’s consolidated profit in Q1FY25 rose 18.68% YoY to ₹1,941 crore compared to ₹1,644 crore in the corresponding quarter of the previous year. On a standalone basis, Bajaj Auto’s net profit was ₹1,988.34 crore, up 19.4% YoY from ₹1,664.77 crore.

About Bajaj Auto Ltd

Bajaj Auto, the flagship company of Bajaj Group, is a two-wheeler and three-wheeler manufacturing company that exports to 79 countries across several countries in Latin America, Southeast Asia, and many more.

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