Technology

The Government has announced a major fiscal stimulus by reducing
corporate tax rates across the board through an ordinance. The changes
made to the income tax are listed below.
? Corporate tax rates have reduced from 30% to 22% for companies that are
not availing any exemption/incentive. The effective tax rate for these
companies shall be 25.17% inclusive of surcharge & cess.
? Tax rates for any new domestic company incorporated on or after 1st
October 2019 making fresh investment in manufacturing, to 15% from 25%.
This is conditional upon the companies not availing any exemption/
incentive and commences their production on or before 31stMar23.
Effective tax rate works out to be 17.01% inclusive of surcharge & cess.
? MAT rates for companies who are paying tax at concessional rates or zero
rate have been reduced to 15% from 18.5%.

While we are very constructive on the markets from a 12-18 months
perspective we believe that one should focus only on quality businesses with
strong moats and avoid companies which either dont have very strong moats
or are highly leveraged or where management integrity is questionable.

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