Market participants took note of Godrej Consumer Products Limited’s (GCPL) positive reaction to the Union Budget provision allowing companies to set off up to 25 per cent of their tax liability against accumulated Minimum Alternate Tax (MAT) credits under the new tax regime, a move seen as supportive for corporate liquidity and reinvestment.
Commenting on the development, Sudhir Sitapati, Managing Director and Chief Executive Officer of Godrej Consumer Products Limited, said the measure would ease the transition for companies with legacy MAT credits and improve overall cash flows.
“We particularly welcome the MAT credit set-off being allowed up to 25 per cent of the tax liability under the new tax regime. This move improves cash flows and makes the new tax regime smoother for companies with accumulated credits, freeing up capital for reinvestment into growth and consumption-led categories,” Sitapati said.
The announcement is viewed as a balance-sheet positive for companies that had deferred a shift to the new tax regime due to unutilised MAT credits. Analysts believe the policy change could accelerate corporate adoption of the new tax structure, improve near-term liquidity, and support capital allocation towards expansion and demand-driven segments.
The relief is also expected to benefit consumption-focused sectors, including FMCG, by enabling companies to deploy freed-up capital into growth initiatives, product innovation and market expansion, aligning with broader economic growth expectations.
