Many state-run oil companies are unlikely to switch to the lower corporate tax regime this year as it would lead to a loss of accumulated tax credit worth thousands of crores and hurt their annual profits.
The government had in September announced a steep 10-12-percentage-point reduction in corporate tax rate to 25.17 per cent to push investments and, in turn, lift the sagging economy. Switch to the new tax regime would require the companies to give up all current tax incentives and exemptions and forego all unused Minimum Alternate Tax (MAT) credits.
Executives at ONGC, Indian Oil , GAIL and HPCL said they are yet to take a call but there is a high possibility that they would switch to the new format only after most of their MAT credit is exhausted. MAT credit is similar to paid advance taxes that could be set off against future tax liabilities. Read more
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