v3.26.1
Income Taxes
 12 Months Ended
Mar. 31, 2026
Income Taxes [Abstract]  
INCOME TAXES

12. INCOME TAXES 

 

The United States of America

 

The Company is incorporated in the State of Nevada in the U.S., and is subject to U.S. federal corporate income taxes with tax rate of 21%. The State of Nevada does not impose any state corporate income tax.

 

Green Energy Capital Asset Inc. (“Green Energy”) is incorporated in the State of Wyoming in the U.S., and is subject to U.S. federal corporate income taxes with tax rate of 21%. The State of Wyoming does not impose any state corporate income tax.

 

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act imposes a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries, and future foreign earnings are subject to U.S. taxation. The Tax Act also established the Global Intangible Low-Taxed Income (GILTI), a new inclusion rule affecting non-routine income earned by foreign subsidiaries. For the years ended March 31, 2026 and 2025, the Company’s foreign subsidiary in China was operating at loss and as such, did not record a liability for GILTI tax.

 

On July 4, 2025, the One Big Beautiful Act (“OBBBA”) was signed into law. The OBBBA made several key provisions of the Tax Cuts and Jobs Act of 2017 permanent, including 100% bonus depreciation, the immediate expensing of domestic research costs, and the introduction of a favorable modification to the business interest expense limitation. Together, these changes accelerate the timing of certain tax deductions in the current period that allow for reductions in cash taxes. However, there is no tax impact for the Company because none of the accelerated deductions under the OBBBA’s scope-such as qualified bonus depreciation or domestic research expense apply to the Company’s operations or asset in the current period. Consequently, the OBBBA has no effect on the Company’s current or deferred tax position.

 

The Company’s net loss for U.S. income taxes from U.S amounted to approximately $4.7 million and $2.2 million for the years ended March 31, 2026 and 2025, respectively. As of March 31, 2026 and 2025, the Company’s net operating loss carryforward for U.S. income taxes was approximately $10.0 million and $7.9 million, respectively. The net operating loss carryforward will not expire and is available to reduce future years’ taxable income but limited to 80% of income until utilized. Management believes that the utilization of the benefit from this loss appears uncertain due to the Company’s operating history. Accordingly, the Company has recorded a 100% valuation allowance on the deferred tax asset to reduce the deferred tax assets to zero on the consolidated balance sheets. As of March 31, 2026 and 2025, valuation allowances for deferred tax assets for US income taxes were approximately $2.7 million and $1.7 million, respectively. Management reviews the valuation allowance periodically and makes changes accordingly.

 

PRC

 

Hunan Ruixi is subject to PRC Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant PRC income tax laws. The EIT rate for companies operating in the PRC is 25%.

 

Hong Kong

 

Senmiao Technology (Hong Kong)., Limited (“Senmiao HK”) is subject to Hong Kong Profits Tax (“Profits Tax”) on the assessable profits in accordance with the relevant Hong Kong tax legislation. The applicable tax rate for the first HKD$2 million of assessable profits is 8.25% and assessable profits above HKD$2 million will continue to be subject to the rate of 16.5% for corporations in Hong Kong.

 

Income/(loss) before income tax by jurisdiction as follows:

 

    For the Years Ended March 31,  
    2026     2025  
U.S.   $ (4,738,176 )   $ (2,165,429 )
PRC     (536,050 )     258,588  
Hong Kong     5,325       —  
Total net loss before income tax   $ (5,268,901 )   $ (1,906,841 )

 

For the years ended March 31, 2026 and 2025, the Company had no current tax expense or deferred tax expense.

 

Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 3 (y), Recently adopted accounting pronouncements, the reconciliation of taxes at the PRC statutory rate to our provision for (benefit from) income taxes for the years ended March 31, 2026 and 2025 was as follows:

 

    For the Years Ended March 31,  
    2026     2025  
Loss before income tax   $ (5,268,901 )     100.0 %   $ (1,906,841 )     100.0 %
PRC statutory income tax rate     25.0 %             25.0 %        
Computed income tax benefit with PRC statutory income tax rate     (1,317,225 )     25.0 %     (476,710 )     25.0 %
Domestic tax effects                                
Changes in valuation allowance     98,220       (1.9 )%     43,530       (2.3 )%
True-up on NOL     —       — %     72,424       (3.8 )%
Non-deductible expenses     4,863       (0.1 )%     2,113       (0.1 )%
Non-deductible expense on contract default     —       — %     49,194       (2.6 )%
Other adjustments     30,930       (0.6 )%     —       — %
Foreign tax effects                                
U.S.                                
Different tax rate in other jurisdictions     189,527       (3.6 )%     86,617       (4.5 )%
Changes in valuation allowance     991,689       (18.8 )%     78,894       (4.1 )%
True-up on NOL     —       — %     101,291       (5.3 )%
Non-deductible overseas salary     —       — %     25,200       (1.3 )%
Other adjustments     3,328       (0.1 )%     17,447       (1.0 )%
Other foreign jurisdictions     (1,332 )     0.1 %     —       — %
Effective tax rate   $ —       — %   $ —       — %

 

Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 3 (y), Recently adopted accounting pronouncements, cash paid for income taxes, during the years ended March 31, 2026 and 2025 were as follows:

 

    For the Years Ended
March 31,		  
    2026     2025  
U.S.   $ —     $ —  
PRC     —       —  
Hong Kong     —       —  
Total   $ —     $ —  

 

The significant components of deferred taxes for continuing operations were as follows:

 

    March 31,     March 31,  
    2026     2025  
Deferred Tax Assets            
Net operating loss carried forward   $ 2,324,852     $ 1,907,516  
Allowance for credit losses     609,018       503,502  
Excess of warrant fair value over offering proceeds     608,255       —  
Lease liability     14,506       2,591  
Total deferred tax assets     3,556,631       2,413,609  
Less: valuation allowance     (3,503,857 )     (2,413,609 )
Total deferred tax assets, net of valuation allowance     52,774       —  
Net off against deferred tax liabilities     (52,774 )     —  
Net deferred tax assets   $ —     $ —  

 

 

    March 31,     March 31,  
    2026     2025  
Deferred tax liabilities            
Right of use asset   $ (10,153 )   $ —  
Change in fair value of derivative liabilities     (42,621 )     —  
Total deferred tax liabilities     (52,774 )     —  
Net off against deferred tax assets     52,774       —  
Net deferred tax liabilities   $ —     $ —  

  

The changes related to valuation allowance from continuing operations are as follows:

 

    March 31,     March 31,  
    2026     2025  
Balance at beginning of the year   $ 2,413,609     $ 2,291,185  
Additions     1,090,248       122,424  
Balance at end of the year   $ 3,503,857     $ 2,413,609  

 

As of March 31, 2026 and 2025, the Company’s PRC entity from continuing operations had net operating loss carryforwards of approximately $0.9 million and $1.0 million, respectively, which will be available to offset future taxable income. As of March 31, 2026, these carryforwards will expire in calendar year 2026 through 2031, if not used. As of March 31, 2026 and 2025, valuation allowances for deferred tax assets for PRC income taxes were approximately $0.8 million and $0.7 million, respectively. With the consideration of the duration of statutory carry forward periods and forecasts of future profitability, it has concluded that it is more likely than not that all its deferred tax assets generated from the Company would not be utilized in the future. The Company has provided full allowance of its deferred tax assets.

 

Uncertain tax positions

 

The Group evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of March 31, 2026 and 2025, the Group did not have any unrecognized uncertain tax positions. For the years ended March 31, 2026 and 2025, the Company did not incur any interest and penalties related to potential underpaid income tax expenses.

 

According to PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or withholding agent. The statute of limitations will be extended to five years under special circumstances, which are not clearly defined (but an underpayment of tax liability exceeding RMB0.1 million is specifically listed as a special circumstance). In the case of a related party transaction, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion.