Amendment Of Income Tax Act - Consumer Sector Narrative Vs Reality: ICICI Securities
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ICICI Securities Report
Narrative - Finance Bill amendment of Income Tax Act to disallow depreciation on goodwill will have a material impact on companies’ fair value.
Reality, our view: There will be greater clarity once the fine print of this amendment is released. However, our initial reading is that, if enacted, this could impact potential tax savings for some consumer companies.
That said, we assume that this is a one-time impact which will not have any (material) long-term implications on the valuations of impacted companies.
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