IGC Pharma, Inc. Income Taxes Disclosure

NOTE 16 – INCOME TAXES

 

The Company calculates its provision for foreign and U.S. federal income taxes based on the current tax law. As the Company maintains a full valuation allowance against its deferred tax assets, there is no income tax expense recorded related to this change other than the Federal AMT credit which are refundable due to the passage of tax reform.

 

Due to the Company’s history of losses and uncertainty of future taxable income, a valuation allowance sufficient to fully offset net operating losses and other deferred tax assets has been established. The valuation allowance will be maintained until sufficient positive evidence exists to support a conclusion that a valuation allowance is not necessary.

Income tax expense/(benefit) for each of the years ended March 31 consists of the following:

 

		Year Ended March 31, (in thousands)
Income Tax Expense
		2025 ($)				2024 ($)
Net income loss before tax			(7,121	)			(13,000	)
Tax rate			21	%			21	%
Expected income tax recovery			(1,495	)			(2,730	)
Impact of tax rate differences in foreign jurisdictions			(72	)			(151	)
Tax rate changes and other adjustments			(2,305	)			1,475
Permanent differences			-				-
Change in valuation allowance			3,872				1,406
			-				-

 

The significant components of deferred income tax expense/(benefit) from operations before non-controlling interest for each of the years ended March 31 are approximated as follows:

 

		Year Ended March 31, (in thousands)
Deferred income taxes
		2025 ($)				2024 ($)
Net operating loss carry-forwards foreign			332				287
Non-capital loss carry-forwards – U.S.			18,365				14,272
Temporary differences			427				418
Net deferred tax asset			19,124				14,977
Valuation allowance			(19,124	)			(14,977	)
			-				-

The table below sets forth the details of expiration of the non-financial carried forward losses of the Company as of March 31, 2025, as under:

 

Year		Amount (in thousands) ($)
2029			16
2030			37
2031			3,081
2032			4,141
2033			627
2034			1,269
2035			1,735
2036			1,176
2037			819
No expiry			1,256
No expiry			4,132
No expiry			7,932
No expiry			8,841
No expiry			14,966
No expiry			8,552
No expiry			6,884
No expiry			22,006
Total			87,469

 

Realization of deferred tax assets, including those related to net operating loss carryforwards, are dependent upon future earnings, if any, of which the timing and amount are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. Based upon the Company’s current operating results management cannot conclude that it is more likely than not that such assets will be realized. The Company files income tax returns in India, Colombia, and the U.S. The Company has a carry-forward R&D tax credit of approximately $4,542 thousand.