Company: ZCARW
Filing Date: 2025-06-30
Form Type: 10-K
Source: 0001213900-25-059675
Chunk: 2225

Company: Zoomcar Holdings, Inc.
Filing Date: 2025-06-30
Form: 10-K
Item: Item 7A
Chunk 2225
---
, extending the repayment period, or forgiving
a portion of the payable. Such restructuring is done with the intent to provide relief to the borrower and to maximize the potential for
payable recovery by the Company.

In accordance with ASC 470-60, when
the total future cash payments under the new terms are less than the carrying amount of the payable at the date of restructuring, the
difference between the carrying amount and the total future cash payments is recognized as a ‘Gain on Troubled Debt Restructuring’
in the Consolidated Financial Statements. This gain is recorded immediately in the period the restructuring occurs.

If the total future cash payments
under the new terms exceed the carrying amount of the payable at the date of restructuring, no adjustment to the carrying amount of the
payable is made. Instead, the company calculates a New Effective Interest Rate (EIR) based on the revised terms of the restructured payable.
The debt is then amortized over the remaining life of the payable using the new EIR, with interest expense recognized based on this rate
in future periods.

F-20

ZOOMCAR HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.Summary of Significant Accounting Policies (Continued)

xxviii.Taxes

Income taxes are accounted for under
the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss
and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded for
deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company recognizes the effect
of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured
at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period
in which the change in judgment occurs. Interest related to unrecognized tax benefits in interest expense and penalties.

xxix.Contingencies

The Company is subject to legal proceedings
and claims that arise in the ordinary course of business.