MUMBAI: Country's largest corporate Reliance Industries (RIL) is yet to decide on whether to adopt the newer rate of corporate taxation or continue with the older one, a senior official said on Friday.
"In the results announced for the September quarter, it has only reduced the Minimum Alternate Tax (MAT) to 15 per cent from the earlier 18.5 per cent," its joint CFO V Srikanth told reporters here. The government had last month slashed the corporate tax by ten percentage points, under which the effective outgo for companies will come down to 25.17 per cent.
However, companies will have to give up on tax incentives enjoyed by it otherwise if they decide to make the switch. "We have not elected whether we will be going to option A or option B, as you know we have time to decide. The only change we have done is to the extent that MAT rate drops from 18.5 to 15 as far as RIL's current tax calculation is concerned," Srikanth told reporters here.
He said that the company has time till December to decide on the same and will do so in due course. Srikanth said that the effective rate of taxation for its telecom and retail arms stay at the same level of 35 per cent.
At the consolidated level, the tax outgo has come down to 21 per cent including the tax before net profit and the deferred tax for September from the 25 per cent in the preceding quarter, and this reflects the change only in the MAT, he said.
"If you look at the number - that is current tax, plus deferred tax on profit before tax for the second quarter was about 21 per cent, which was 25 per cent in Q1. This only reflects the fact that the MAT has come down," Srikanth said.
At a consolidated level, the company reported an outgo of Rs 2,065 crore for the September 2019 quarter as against Rs 2,917 crore in the year-ago period.