New Delhi : Moody’s Investors Service on September 21 said the cut in corporate tax increases the government’s fiscal risks while headwinds from cyclical factors such as rural stress, weak corporate sentiment and slow credit pose threat to near-term growth.On September 20, the Centre announced a reduction in the base corporation tax rate to 22 percent from 30 percent as part of stimulus measures to revive slowing economic growth.The rating agency said it does not expect the corporate tax rate cut to revive growth to the extent that stronger tax buoyancy compensates for the loss of revenue. “While the reduction brings India’s corporate tax rate closer to peers throughout Asia and will support the business environment and competitiveness, a host of cyclical factors, including rural financial stress, weak corporate sentiment, and a slow flow of credit in the financial sector, remain headwinds to near-term growth,” it said.
