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INCOME TAXES
 12 Months Ended
Sep. 30, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 20 – INCOME TAXES

 

The Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017. The Tax Act reduces the maximum U.S. federal corporate tax rate from 35% to 21%, allows net operating losses incurred in 2018 and beyond to be carried forward indefinitely, allows alternative minimum tax carryforwards to be partially refunded, beginning in 2018, and fully refunded by 2021, and creates new taxes on certain foreign sourced earnings.

 

At September 30, 2021, the Company had approximately $37,099,262 of federal and $13,726,364 of state net operating losses. The net operating loss carryforwards, if not utilized, will begin to expire in 2036 for federal purposes and in 2036 for state purposes.  The company is currently reviewing net operating losses for Section 382 limitation purposes and will make any required adjustments to the net operating losses at the completion of the study.

 

The following is a geographical breakdown of loss before the provision for income taxes:

 

   Year ended September 30, 
   2021   2020 
       Restated 
Domestic  $30,957  $(6,422,704)
Foreign   738,255   (933,531)
Loss before provision for income taxes  $769,212   $(7,356,235)

 

 

Cemtrex Inc. and Subsidiaries

 

The provision for income taxes consisted of the following:

 

   September 30, 2021   September 30, 2020 
       Restated 
Current (benefit)/provision           
Federal  $ -   $- 
State    375,434    (209,032)
Foreign    -    - 
Total current (benefit)/provision    375,434    (209,032)
            
Deferred provision           
Federal    -    2,282,867 
State    -   - 
Foreign    -    - 
Total deferred provision  $ -  $2,282,867 
            
Total (benefit)/provision for income taxes  $ 375,434  $2,073,835 
            
Effective Income tax rate    48.81%   

-28.19

%

 

The following is a reconciliation of the effective income tax rate to the federal and state statutory rates:

   For the Fiscal Year   For the Fiscal Year 
   Ended   Ended 
   September 30, 2021   September 30, 2020 
       Restated 
U.S. statutory rate   21.00%   21.00%
State statutory rate   6.50%   6.50%
Foreign tax rate differential   0.00%   0.00%
Change in valuation allowance   

0.00

%   -30.78%
Effect of change in rates   0.00%   0.00%

Permanent differences

   21.31%   -24.91%
Effective rate   48.81%   -28.19%

 

 

Cemtrex Inc. and Subsidiaries

 

The components of our deferred tax assets and liabilities are summarized as follows:

 

   September 30, 2021   September 30, 2020 
       Restated 
Deferred Tax Assets:                    
Net operating loss carryforwards  $

8,702,738

   $20,482,973 
Inventory   

1,405,057

    - 
Prepaid expenses   -    - 
Allowance for bad debt   

35,345

   3,491 
Fixed Assets   

-

    19,271 
Goodwill amortization   

-

    - 
Non-qualified stock options   -    - 
Warrants (interest expense)   1,155,642    - 
Accruals   

280,447

    2,699,246 
Warranty Reserve   28,002    - 
Foreign Tax Credits   -    354,000 
Other   

4,358

    - 
Total gross deferred taxes   

11,611,589

   23,558,981 
Valuation allowance   

(9,491,650

)   (22,720,711)
Net deferred tax assets   

2,119,939

    838,270 
           
Deferred Tax Liabilities:          

Inventory and other Reserves

   

(638,230

)   - 
Inventory   

-

   (2,277)
Prepaid expenses   (87,934)   (45,563)
Goodwill amortization   

(557,074

)   (428,395)
Research and development expenses   -    -
Depreciation   

(836,701

)   (319,090)
Gain/loss on fixed asset disposal   -    -
Other   

-

   (42,945)
Total deferred tax liabilities   

(2,119,939

)   (838,270)
           
Total deferred tax assets (liabilities)  $

-

   $-