Tax Saving Investments in which most of the deductions under section 80 are also available to NRIs. For FY 2016-17, a maximum deduction of up to Rs. 1,50,000 is allowed under section 80C from gross total income for an individual.
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The income of NRIs can be taxable, but how will the tax department keep a track of payments or Ticket to send money abroad made abroad? Form 15CA & 15CB is the answer! It is mandatory for anyone to file these forms before remitting payments abroad if certain conditions prevail.
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In CA In Delhi’s previous blog, we discussed what are Form 15CA & 15CB, and when do you need them. Form 15CA & 15CB are required to be filed before remitting any International Payments, payments outside India if certain conditions are prevailing.
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Beware of Cash Transactions From April 1, 2017, be careful while accepting cash for more than Rs 2,00,000/- or pay 100% penalty for accepting it. Remember, it is the cash receiver who needs to pay the penalty and not the cash payer. It is a move towards eliminating cash transactions and shift towards cashless economy.
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EBITDA is the pulse rate of your company, and that’s also what makes it a sweet apple of investors eye. You just cannot ignore it, just cannot! It gives a clear reflection of your company’s ‘operating’ performance. There are many more ratios to check operating efficiency, but why this ratio stands away from the crowd is its ability to facilitate comparisons in the industry. Let’s dig into more.This post will cover EBITDA Margin Meaning, Formula, Calculation, how to calculate, and all you need to know.
Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA). See, the name itself reveals more than half of the meaning as it is calculated as operating earnings before deduction of interest, tax and depreciation (Example at the end of this article).
EBITDA = Earnings Before Interest and Tax + Depreciation + Amortization
EBITDA, when compared with net sales, gives EBITDA Margin.
It gives you a ‘standard measure’ to compare your business’s earnings with your peers in the industry, irrespective of their capital investments, debt and tax profiles. It eliminates the interest and tax components, and depreciation component, which is a non cash expenditure.
Let’s say there are two different companies with different investments in assets or different amounts of debts, how would you judge the operating performance of those companies? EBITDA margin is your solution.
Investors use this measure to compare similar companies across the same industry. EBITDA multiple is also used in company valuation after its division from Enterprise Value (EV). Hence, entrepreneurs must keep an eye on EBITDA margin to constantly measure where they stand against their rivals in terms of operating performance.
It gives you a fair picture of your operations, but it does have drawbacks.
If companies are more debt laden, and interest costs are higher than they should be, EBITDA won’t give you that picture, since it excludes interest costs. Companies that require constant equipment upgradation should also be careful while using it as it excludes depreciation.
It can manipulate you to believe a company is performing well, even if it is not. EBITDA can be impressive, but net profit of the company may be low due to interest cost or depreciation or tax rates. So, it is better to not overlook the net profits too for comparison.
Itwill always be more than your net profits.
Despite its limitations, it serves as a tool to compare your company with other companies and locate the points of your strengths and weakness, if you use it wisely.
Revenue= Rs 1 Crore
Expenses other than depreciation, interest and taxes= Rs 70,00,000
| Particulars | Amount (Rs) | In Words |
| Revenue | 10,00,00,000 | 10 Cr |
| Expenses other than Depreciation, Interest and Taxes | 7,00,00,000 | 7 Cr |
| EBITDA | 3,00,00,000 | 3 Cr |
| Depreciation | 50,00,000 | 50 Lakh |
| EBIT | 2,50,00,000 | 2.5 Cr |
| Interest Cost | 30,00,000 | 30 Lakh |
| PBT | 2,20,00,000 | 2.2 Cr |
| Taxes @ 30% | 66,00,000 | 66 Lakh |
| PAT | 1,54,00,000 | 1.54 Cr |
| EBITDA Margin | 30% | |
| Net Profit Margin | 15.4% |
EBT and PBT have been assumed to be equal in this case.
Such a simple calculation, and you can figure out so much from it.
For any queries, feel free to reach out to Chartered Accountants on CA in Delhi ‘s homepage
Qualifications & Disqualifications Of Auditor is a person or a firm appointed by a company to execute an audit. To act as an auditor, a person should be certified by the regulatory authority of accounting and auditing or possess certain specified qualifications.
A Chartered Accountant holding a valid Certificate of Practice.
A firm shall also be considered to appointed by its firm name whereof majority of partners practicing in India are qualified for appointment as auditor of a company.
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