Enjoying tax holidays, IT firms won't gain much from the rate cut

The effective tax rate for TCS in FY19 stood at 24.1 per cent, while for HCL Technologies, it was 19.8 per cent

Indian information technology (IT) services firms will not gain much from the government’s move to reduce the corporation tax rate. With many of them claiming exemptions under the SEZ (special economic zone) regulations, their effective tax rates are already below the revised corporation tax rate of 25.17 per cent, which includes both surcharge and cess.

Among the top-tier IT firms, Infosys is the only firm that is likely to get a marginal benefit of the new tax rate. The benefit for the company is likely to be around 1.6 per cent, as the Bengaluru-headquartered firm's effective tax rate stood at 26.8