It will be a mixed bag for India Inc

Even as Budget will reduce corporate tax, sources indicate depreciation rates under I-T (sec 32) are likely to be brought down for plant and machinery.

Even as the budget will reduce corporate tax (effective tax rates will be 34 per cent instead of 36.6 per cent), sources indicate that depreciation rates under income tax (section 32) are likely to be brought down to 15 per cent for plant and machinery and appropriately lower rates for other assets.

The idea being to reduce the divergence between book and income-tax depreciation. On the corporate tax front, it is expected that the cut will be phased out over two years due to revenue considerations. Similarly, reduction in income-tax depreciation may also be phased out.

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