The corporate tax cut bonanza continues as around 12 companies are set to benefit by Rs 44,000 crore due to deferred tax liabilities, The Times of India reported.
As per Edelweiss Securities, the biggest gainers are Reliance Industries and ONGC, with each stand to gain over Rs 13,000 crore because of deferred tax. They are followed by Indian Oil (Rs 4,717 crore), PowerGrid (Rs 2,862 crore) and Tata Steel (Rs 2,231 crore).
Deferred tax liabilities are taxes which have been accounted for but yet to be paid. It signifies that the company would make well on the tax payment at a deferred date. Companies can also choose to make payments early.
However, companies that chose deferred tax liabilities to be paid at an early date lose out on the recent tax cut. These include SBI (Rs 3,316 crore), ICICI Bank (Rs 3,124 crore), Yes Bank (Rs 725 crore) and Sun Pharma (Rs 214 crore), the paper noted.
Finance Minister Nirmala Sitharaman announced slashed corporate tax rate of 22 percent (from 30 percent) on September 20. Sitharaman said the estimated revenue hit from the tax cut would be Rs 1.45 lakh crore.
For the top 1,000 listed companies across 80 sectors, savings worth Rs 37,000 crore are expected as the immediate benefit from the tax cut, as per CRISIL. They will now also have more room for expenditure with the tax amount reduced.
The rating agency added that these companies account for 75 percent of all corporate tax. Of these companies in oil and gas, consumer-related and exports-linked sectors such as IT services, pharmaceuticals and gems and jewellery account for 55 percent taxes while the construction and investment-linked ones account for 10 percent each, CRISIL said.
Disclaimer: Reliance Industries is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments
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