Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 205

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 19
Chunk 205
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collectability is not ensured until receipt of the premium. Therefore, the Company does not accrue any commissions prior to the receipt
of the related premiums of insurance carriers, due to the specific practice in the industry.

The Company acquired the insurance agency business in December 2023.
The Company recorded insurance agency commission revenue in the amount of nil, niland RMB288,369for the year ended September 30,2022,
2023 and 2024, respectively.

Employee benefit expenses

As stipulated by the regulations of the PRC, full-time employees of
the Group are entitled to various government statutory employee benefit plans, including medical insurance, maternity insurance, workplace
injury insurance, unemployment insurance and pension benefits through a PRC government-mandated multi-employer defined contribution plan.
The Group is required to make contributions to the plan and accrues for these benefits based on certain percentages of the qualified employees’
salaries. The total expenses the Group incurred for the plan were nil, niland RMB852for the years ended September 30, 2022, 2023 and
2024, respectively.

PRC value-added taxes and related taxes

The Group is subject to value-added taxes at the rate of6% for rendering
services and13% for sales of goods, education surtax and urban maintenance and construction tax, on the services provided in the PRC.
Education surtax and urban maintenance and construction tax are primarily levied based on revenue at applicable rates and are recorded
as a reduction of revenues.

Cost of revenues

Cost of revenues consists primarily of commissions paid to distribution
channels. The Company generally recognizes commissions as cost of revenues when incurred. The Company acquired the insurance agency business
in December 2023. For the year ended 30, 2022, 2023 and 2024, the cost of revenue amounted to nil, niland RMB274,901, respectively, from
its continuing operations.

F-17

Income taxes

Current income taxes are provided on the basis of profit before income
tax for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax purposes,
in accordance with the regulations of the relevant tax jurisdictions. The Group follows the asset and liability method of accounting for
income taxes.

Deferred income taxes are provided using assets and liabilities method,
which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been
included in the financial statements. Under this method,