Giving a major relief to the Indian Railway Finance Corporation (IRFC), the dedicated market borrowing arm of the railways, the ministry of corporate affairs has exempted it from an accumulated deferred tax liability of Rs 63.92 billion. This will increase the company’s net worth and help IRFC raise additional debt of over Rs 630 billion, Indian Railways said in a statement issued on Tuesday.
Besides, it had to make a provision for the deferred tax liability at 35 per cent. Thus the company’s books were bearing a total tax provision of 56 per cent. This will now come down to 21 per cent, leading to substantial gains in profit after tax, earnings per share and book value per share.