Roadzen Inc. Income Taxes Disclosure

24 Income taxes

 

The Company’s net loss before provision for income taxes for the year ended March 31, 2025 and March 31, 2024 were as follows:

 Schedule of Income before Income Tax Domestic and Foreign

		For the Year ended				For the Year ended
Particulars		March 31, 2025				March 31, 2024
Domestic			(46,945,010	)			(93,127,552	)
Foreign			(26,132,274	)			(6,755,174	)
Total			(73,077,284	)			(99,882,726	)

 

The components of the provision for income taxes for the period ended March 31, 2025 and March 31, 2024 were as follows:

 Schedule of Components of Provision for Income Taxes

		For the Year ended				For the Year ended
Particulars		March 31, 2025				March 31, 2024
Current:
Domestic			53,058				—
Foreign			—				19,177
Total			53,058				19,177
Deferred:
Domestic			—				—
Foreign			(67,031	)			(42,825	)
Total			(67,031	)			(42,825	)
Total provision for income taxes			(13,973	)			(23,648	)

 

The following is a reconciliation of the federal statutory income tax rate to the Company’s effective tax rate for the year ended March 31, 2025 and March 31, 2024:

 Schedule of Reconciliation of Statutory Federal Income Tax Rate

		For the Year ended				For the Year ended
Particulars		March 31, 2025				March 31, 2024
Federal statutory income tax rate			21.00	%			21.00	%
Non deductible expenses			(0.53	)%			(3.70	)%
Valuation allowance			(20.90	)%			(17.45	)%
Foreign rate differential			0.00	%			0.21	%
Share warrants			0.00	%			0.00	%
Other			0.45	%			(0.04	)%
Total provision for income taxes			0.02	%			0.02	%

 

The components of the Company’s net deferred tax assets as of the year ended March 31, 2025 and year ended March 31, 2024 were as follows:

 Schedule of Net Deferred Tax Assets

Particulars		As of March 31, 2025				As of March 31, 2024
Deferred tax assets:
Net operating loss carry forwards			41,091,266				25,515,511
Unabsorbed depreciation carry forwards			121,285				76,126
Retirement benefits			15,209				72,349
Depreciation and amortization			74,937				109,299
Others			-325,774				244,136
Total deferred tax assets			40,976,924				26,017,421
Less: valuation allowance			(40,976,924	)			(25,995,368	)
Deferred tax assets, net of valuation allowance			-				22,053
Deferred tax liabilities:
Intangibles on account of business combination			(41,688	)			(263,665	)
Net deferred tax assets/ (liabilities)			(41,688	)			(241,612	)

 

 

Roadzen Inc.

Notes to the consolidated financial statements

(in US $, except share count)

 

Movement recognized in net deferred tax assets:

 Schedule of Movements in Deferred Tax Assets

		As of March 31, 2024				Recognized/ reversed through statements of operations				Impact of currency translation and acquisitions				As of March 31, 2025
Deferred tax assets:
Net operating loss carry forwards			25,515,511				15,575,755				—				41,091,266
Unabsorbed depreciation carry forwards			76,126				45,159				—				121,285
Retirement benefits			72,349				-57,140				—				15,209
Depreciation and amortization			109,299				-34,362				—				74,937
Fair value changes on convertible notes			—				—				—				—
Others			244,136				(569,910	)			—				-325,774
Less: valuation allowance			(25,995,368	)			(14,981,556	)			—				(40,976,924	)
Deferred tax liabilities:
Intangibles on account of business combination			(263,665	)			221,977				—				(41,688	)
Acquisitions			—				635,965				(635,965	)			—
Deconsolidation			—				-				-				—
Gain on convertible notes			-				608,233				(608,233	)			-
Currency translation			—				(284,598	)			284,598				—
Net deferred tax assets/ (liabilities)			(241,612	)			551,291				(351,367	)			(41,688	)

 

Particulars		As of March 31, 2023				Recognized/ reversed through statements of operations				Impact of currency translation and acquisitions				As of March 31, 2024
Deferred tax assets:
Net operating loss carry forwards			8,480,316				17,035,195				—				25,515,511
Unabsorbed depreciation carry forwards			54,438				21,688				—				76,126
Retirement benefits			56,603				15,746				—				72,349
Depreciation and amortization			50,918				58,381				—				109,299
Fair value changes on convertible notes			—				—				—				—
Others			5,965				238,171				—				244,136
Less: valuation allowance			(8,565,895	)			(17,429,473	)			—				(25,995,368	)
Deferred tax liabilities:
Intangibles on account of business combination			—				(263,665	)			—				(263,665	)
Gain on convertible notes			—				608,233				(608,233	)			—
Currency translation			—				(193,121	)			193,121				—
Acquisitions			—				(48,330	)			48,330				—
			82,345				42,825				(366,782	)			(241,612	)

 

The Company regularly reviews its deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing taxable temporary differences and tax planning strategies. The Company’s judgement regarding future profitability may change due to many factors, including future market conditions and the ability to successfully execute the business plans and/or tax planning strategies. Should there be a change in the intangible on account of business combination ability to recover deferred tax assets, the Company’s income tax provision would increase or decrease in the period in which the assessment is changed. The Company’s valuation allowance increased by $14,981,556 during the period ended March 31, 2025 and $17,429,473 during the year ended March 31, 2024.

 

The Company has not provided U.S. income taxes and foreign withholding taxes on undistributed earnings of foreign subsidiaries because the Company intends to permanently reinvest such earnings outside the U.S.

 

Net operating loss and credit carry forwards

 

As of March 31, 2025, the Company has U.S. federal net operating loss carry forwards of approximately $41,091,266 of which none are subject to limitation under Internal Revenue Code Section 382 (IRC Section 382). The federal net operating loss carry forwards that were generated prior to the 2018 tax year will begin to expire in 2030 if not utilized. For net operating loss carry forwards arising in tax years beginning after March 31, 2017, the tax act limits the Company’s ability to utilize carry forwards to 80% of taxable income, however, these operating losses may be carried forward indefinitely. The state (Delaware) net operating loss carry forwards will begin to expire in 2032 if not utilized. The Company has foreign tax credits which will expire at the end of 8 years from the end of the assessment year in which these tax credits were originated.

 

Utilization of the net operating loss carry forwards may be subject to a substantial annual limitation due to the ownership change provisions of IRC Section 382 and similar state provisions. The annual limitation may result in the inability to fully offset future annual taxable income and could result in the expiration of net operating loss carry forwards before utilization. The Company continually reviews the impact to net operating losses of any ownership changes.

 

Unrecognized tax benefits

 

The Company has adopted authoritative guidance which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in the Company’s income tax return, and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company did not have any unrecognized tax benefits with a significant impact on its financial statements as of March 31, 2025 and March 31, 2024.

 

The Company’s major tax jurisdictions are India, the United Kingdom and the U.S. The U.S. federal, state and foreign jurisdictions have statutes of limitations that generally range from three to six years. Due to the Company’s net losses, substantially all of its federal and state income tax returns are subject to examination for federal and state purposes.