Moody’s Investors Service today termed the central government’s decision to cut corporate tax rate as a credit positive move. The rating agency said that the tax cut would give a boost to net income of Indian firms.
Speaking to media, Senior Vice President of the Moody’s Investors Service Vikas Halan said, that eventual impact of the corporate tax cut on credit profiles of Indian corporates will hinge on whether they utilise the surplus earnings for reinvestment in the business, debt reduction or high shareholder returns.
Moody’s said, the cut in corporate tax is credit positive for companies because it will enable them to generate higher post-tax incomes. The government, yesterday slashed the income tax rate for companies by almost 10 percentage points to 25.17 per cent and offered a lower rate to 15.01 per cent for new manufacturing firms to boost economic growth.