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NSE’s Top 1,000 Firms To Get Rs 37,000-Crore Bounty From Corporate Tax Cut, Says Crisil Research

These 1,000 companies paid Rs 1.8 lakh crore in taxes during 2018-19, says Crisil Research.

Employees walk through the atrium of the National Stock Exchange of India Ltd. (NSE) building in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)
Employees walk through the atrium of the National Stock Exchange of India Ltd. (NSE) building in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

India’s top 1,000 companies listed on the National Stock Exchange could save Rs 37,000 crore as the government cut corporate tax rates, according to Crisil Research.

Over 25,000 companies made profits in financial year ended March 2019, and they accounted for nearly 60 percent of the tax paid by India Inc., the research arm of Crisil Ratings Ltd. said in a report. Of these, 1,074 companies with a revenue of at least Rs 1,000 crore had the highest effective tax rate of 27 percent, and accounted for nearly 40 percent of the total corporate tax revenue, and nearly 80 percent of the tax collected, the report said.

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The 1,000 companies analysed by Crisil Research are spread across more than 80 sectors, including oil and gas, and financial services, and account for over 70 percent of the NSE’s market capitalisation.

Of the 1,000 companies analysed, 250 were loss-making and didn’t pay any taxes. More than 40 percent firms had an effective tax rate of 33 percent in the last financial year. Overall, these 1,000 companies paid Rs 1.8 lakh crore in taxes during 2018-19, the report said. They can now witness tax savings of Rs 37,000 crore.

According to Crisil Research, segments linked to consumers would benefit the most given higher effective tax rates of over 30 percent. On the other hand, exports-linked sectors such as information technology and pharmaceuticals would benefit the least, accounting for only 5-6 percent of potential savings. That’s because they already enjoy low effective tax rates, the report said.

Crisil Research said the savings are based on the profit before tax of 2018-19. As it expects the companies to grow at 5-6 percent in the ongoing financial year, the savings could be higher.

On Friday, Finance Minister Nirmala Sitharaman announced the government’s plan to cut corporate tax rate for all domestic companies to 22 percent from 30 percent. The effective tax rate would be 25.2 percent, including surcharges and cess. The new tax rates would be applicable from April 1. The move, however, would cost the government Rs 1.45 lakh crore in revenue.

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