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INCOME TAXES | 12 Months Ended
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Jun. 30, 2023
Income Tax Disclosure [Abstract] |
INCOME TAXES | NOTE 16 – INCOME TAXES The Company is incorporated in the State of Nevada and registered to do business in the State of California. The following is a breakdown of income before the provision for income taxes: Consolidated pre-tax income (loss) consists of the following: SCHEDULE OF CONSOLIDATED PRE-TAX INCOME (LOSS)
|  | 2023 |  |  | 2022 |
|  | Years Ended June 30, |
|  | 2023 |  |  | 2022 |
US operations |  | $ | (394,914 | ) |  | $ | (1,140,443 | )
Foreign operations |  |  | (2,822,999 | ) |  |  | 3,230,184 |
Net income before income taxes |  | $ | (3,217,913 | ) |  | $ | 2,089,741 |
The components of the provision for income taxes are as follows: SCHEDULE OF COMPONENTS OF PROVISION FOR INCOME TAXES
|  | 2023 |  |  | 2022 |
|  | Years Ended June 30, |
|  | 2023 |  |  | 2022 |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | - |  |  | $ | - |
State and Local |  |  | 13,972 |  |  |  | 2,800 |
Foreign |  |  | 912,588 |  |  |  | 986,138 |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | - |  |  |  | - |
State and Local |  |  | - |  |  |  | - |
Foreign |  |  | - |  |  |  | - |
Provision for income taxes |  | $ | 926,560 |  |  | $ | 988,938 |
A reconciliation of taxes computed at the statutory federal income tax rate to income tax expense (benefit) is as follows: Reconciliation of effective income tax rate SCHEDULE OF RECONCILIATION OF TAXES AT STATUTORY FEDERAL INCOME TAX RATE INCOME TAX EXPENSE BENEFITS
|  | Years Ended June 30, |
|  | 2023 |  |  |  |  |  | 2022 |  |  |  |
Income tax (benefit) provision at statutory rate |  | $ | (675,762 | ) |  |  | 21.0 | % |  | $ | 438,846 |  |  |  | 21.0 | %
State income (benefit) taxes, net of federal tax benefit |  |  | (224,610 | ) |  |  | 7.0 | % |  |  | 145,864 |  |  |  | 7.0 | %
Foreign earnings taxed at different rates |  |  | 1,702,463 |  |  |  | -52.9 | % |  |  | 82,333 |  |  |  | 3.9 | %
Change in valuation allowance for deferred tax assets |  |  | 111,473 |  |  |  | -3.5 | % |  |  | 318,421 |  |  |  | 15.2 | %
Other |  |  | 12,996 |  |  |  | -0.4 | % |  |  | 3,474 |  |  |  | 0.2 | %
Provision for income taxes |  | $ | 926,560 |  |  |  | -28.8 | % |  | $ | 988,938 |  |  |  | 47.3 | %
NETSOL TECHNOLOGIES, INC. Notes to Consolidated Financial Statements June 30, 2023 and 2022 Deferred income tax assets and liabilities as of June 30, 2022 and 2021 consist of tax effects of temporary differences related to the following: Components of deferred tax asset SCHEDULE OF DEFERRED INCOME TAX ASSETS AND LIABILITIES
|  | 2023 |  |  | 2022 |
|  | Years Ended June 30, |
|  | 2023 |  |  | 2022 |
Net operating loss carry forwards |  | $ | 8,281,162 |  |  | $ | 7,885,333 |
Other |  |  | 184,916 |  |  |  | 80,311 |
Net deferred tax assets |  |  | 8,466,078 |  |  |  | 7,965,644 |
Valuation allowance for deferred tax assets |  |  | (8,466,078 | ) |  |  | (7,965,644 | )
Net deferred tax assets |  | $ | - |  |  | $ | - |
The Company has established a full valuation allowance as management believes it is more likely than not that these assets will not be realized in the future. The valuation allowance increased by $500,434 for the year ended June 30, 2023. At June 30, 2023, federal and state net operating loss carry forwards in the United States of America were $29,963,170 and $8,561,437, respectively. Federal net operating loss carry forwards begin to expire in 2028, while state net operating loss carry forwards are expiring each year. Due to both historical and recent changes in the capitalization structure of the Company, the utilization of net operating losses may be limited pursuant to section 382 of the Internal Revenue Code. California has suspended the net operating loss carryover deduction for taxable years 2020, 2021 and 2022. Net operating losses related to foreign entities were $6,022,156 at June 30, 2023. As of June 30, 2023, the Company does not have any unrecognized tax benefits related to various federal and state income tax matters. The Company will recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company is subject to U.S. federal income tax, as well as various state and foreign jurisdictions. The Company is currently open to audit under the statute of limitations by the federal and state jurisdictions for the years ending June 30, 2020 through 2022. The Company does not anticipate any material amount of unrecognized tax benefits within the next 12 months. The cumulative amount of undistributed earnings of foreign subsidiaries that the Company intends to permanently invest and upon which no deferred US income taxes have been provided is $21,484,398 as of June 30, 2023. The additional US income tax on unremitted foreign earnings, if repatriated, would be offset in part by foreign tax credits. The extent of this offset would depend on many factors, including the method of distribution, and specific earnings distributed. The Company determined that it is not practicable to determine unrecognized deferred tax liability associated with the unremitted earnings attributable to the foreign subsidiaries. Income from the export of computer software and its related services developed in Pakistan is exempt from tax through June 30, 2025. The aggregate effect of the tax holiday for June 30, 2023 and 2022 is $1,359,169 and $1,260,502, respectively. The effect on basic and diluted earnings per share is $0.12 and $0.11 for June 30, 2023 and 2022, respectively. NETSOL TECHNOLOGIES, INC. Notes to Consolidated Financial Statements June 30, 2023 and 2022

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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