Also there can be subsidies or concessional loans under certain incentive schemes of the government or government institutions. In effect, interest is a difficult line item to estimate, unless you have access to all capital expenditure estimates, detailed interest and repayment schedules of loans and working capital requirements. So, try to get understand the cash flows of the company for the future, estimate cash surplus deficit and only then try to estimate interest expenses. Companies are free to charge lower or higher rate but there has to be a note to that effect in the annual report. Key variables Have a fix on routine capital expenditure, Expansion and the likely date of their commissioning, Depreciation rates followed by the company for various types of assets.
Depreciation is charged pro rata.
For instance, if the plant is commissioned in March, depreciation will be charged only for one month if the financial year ends in March. For calculation of income-tax, you can deduct depreciation for six months. Depreciation rates are different depending on the type of assets and vary in case of continuous processes industry, depending on the plant-run for one shift, two shifts or three shifts. Tax Liability Taxable profit is calculated after a few adjustments in the accounts. Also, there can be disallowance of some expenses.