New Delhi: PNB Housing Finance today said the company’s effective tax rate will come down by 8-9 percentage points following the government’s decision to slash corporate tax rate.
For 2018-19, the effective tax rate of PNB Housing Finance on a consolidated basis was 31.30%.
On 20 September, Finance Minister Nirmala Sitharaman announced slashing the basic corporate tax rate for domestic companies to 22% from 30%. The effective tax rate for domestic companies reduced to 25.17% from 34.94% inclusive of surcharge and cess. “Considering the tax reductions per the announcement, the expected reduction in the effective tax rate for PNB Housing can be anywhere between 8-9%,” it said in a regulatory filing.
As per the government’s latest investment boosting measure, new manufacturing companies that start production on or before 31 March 2023 and are incorporated on or after 1 October will have an option to pay tax at 15% if they do not avail any exemption/incentive.
The effective tax rate for such companies will be 17.01%, inclusive of surcharge and cess. This is a very positive move and is expected to result in enhanced economic activity along with the reduction in tax rates, PNB Housing Finance said.
Company’s Managing Director Sanjaya Gupta said a slew of measures have been taken by the government to revive the economy and housing finance sector.
“This includes measures like relaxation in minimum holding period to six months for securitisation, additional liquidity support to NHB for further lending to HFCs, on-lending of housing loans up to Rs 20 lakh to be qualified under PSL (priority sector lending), relaxation in ECB end-use and fund for real estate sector, which are all positive for housing finance sector,” Gupta said.
These measures will boost liquidity in HFCs (housing finance companies) and shall immensely help in enhancing the sector’s fund position and further strengthen the asset-liability management. Moreover, the reduction in the corporate tax rate will be a big boost to the capital base and help revive the growth and employment generation across all sectors, Gupta added.
The stock of the company traded 2.43% down at Rs 663 on BSE.