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

NOTE 9 – TAXES

 

Corporate Income Taxes (“CIT”)

 

The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled. Wah Fu is an offshore holding company and is not subject to tax on income or capital gains under the laws of the British Virgin Islands.

 

Wah Fu Holding was incorporated in Hong Kong and is subject to Hong Kong corporate income tax at a rate of 8.25% on assessable profits up to HK$2,000,000 and 16.5% on any part of assessable profits over HK$2,000,000.

 

Distance Learning was registered in the PRC and is subject to corporate income tax at a reduced rate of 15% starting from 2014, when it was approved by local government as a High-technology Company. The certificate of High-technology Company will expire in November 2026.

 

Hunan Huafu, Digital Information, Huaxia Muke,Shanghai Xia Shu, Shanghai Xin Fu, Nanjing Suyun, Guizhou Huafu, Fuzhou Huafu, Sichuan Huafu, Guangzhou Huafu Gansu Huafu and Zhihui Xinyu were registered in the PRC and they were approved by local government as small-scaled minimal profit enterprises. According to the Announcement of the Ministry of Finance and the State Administration of Taxation No. 6 of 2023, small-scaled minimal profit enterprises are subject to corporate income tax at a reduced rate of 5% since January 1, 2023 to December 31, 2027.

 

(i) The components of the income tax expense (benefit) are as follows:

 

    For the Years Ended March 31,  
    2026     2025     2024  
Current income tax provision   $ 17,055     $ 100,095     $ 36,392  
Deferred income tax provision (benefit)     103,970       9       94,498  
Total   $ 121,025     $ 100,104     $ 130,890  

 

(ii) The following table summarizes deferred tax assets resulting from differences between the financial reporting basis and tax basis of assets and liabilities:

 

    As of
March 31,
2026		     As of
March 31,
2025		  
Allowance for doubtful accounts   $ 78,654     $ 76,836  
Deferred revenue     89,139       184,875  
Net operating loss carry-forwards     384,780       748  
Total deferred tax asset     552,573       262,459  
Valuation allowance     (384,780 )     (1,208 )
Deferred tax assets, net   $ 167,793     $ 261,251  

 

According to Chinese tax regulations, net operating loss (“NOL”) can be carried forward to offset operating income for five years. A valuation allowance is established for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize their benefits, or that the realization of future deductions is uncertain. Management performs an assessment over future taxable income to analyze whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

 

(iii) The following table reconciles the PRC statutory rates to the Company’s effective tax rate for the years ended March 31, 2026, 2025 and 2024:

 

    For the Years Ended  
    March 31,
2026		     March 31,
2025		     March 31,
2024		  
Statutory PRC income tax rate     25 %     25 %     25 %
Favorable tax rate impact (a)     (8.6 )%     (10.3 )%     (5.3 )%
Permanent difference     (2.8 )%     - %     - %
Change in valuation allowance     (28.5 )%     2.5 %     2.0 %
Effective tax rate     (14.9 )%     17.2 %     21.7 %

 

(a) Distance Learning and are subject to a favorable tax rate of 15%; Hunan Huafu, Digital Information, Huaxia Muke, Shanghai Xia Shu, Shanghai Xin Fu, Nanjing Suyun, Guizhou Huafu, Fuzhou Huafu, Sichuan Huafu, Guangzhou Huafu Gansu Huafu and Zhihui Xinyu are subject to a favorable tax rate of 5%.

 

Taxes payable

 

Taxes payable consisted of the following:

 

    As of
March 31,
2026		     As of
March 31,
2025		  
Income tax payable   $ 1,045,219     $ 992,973  
Value added tax payable     7,880       13,950  
Other taxes payable     6,464       6,427  
Total   $ 1,059,563     $ 1,013,350