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IRFC tax issue resolved; to raise additional debt of over Rs 630 billion

IRFC faced a deferred tax liability as its depreciation was greater than its profit

Shine Jacob  |  New Delhi 

Indian Railways

Giving a major relief to the (IRFC), the dedicated market borrowing arm of the railways, the has exempted it from an accumulated liability of Rs 63.92 billion. This will increase the company’s net worth and help raise additional debt of over Rs 630 billion, Indian Railways said in a statement issued on Tuesday.

It will also improve the valuation of the company for its maiden IPO. According to the government, post its exemption from the liability, will not require any equity infusion.

faced a liability as its depreciation was greater than its profit. The company did not pay under normal assessment and is subject to a minimum alternate of 21 per cent.

Besides, it had to make a provision for the liability at 35 per cent. Thus the company’s books were bearing a total 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.

First Published: Wed, February 07 2018. 00:54 IST
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