Taxation Theme : 25% Tax Bracket

Since 2014 Govt has been consistently awarding smaller companies with 5% Tax Rebate on income tax ie through movement from 30% to 25% tax bracket . Now 99.3% firms are covered under this .

Tax reduction from 30% to 25% if one includes surcharges gives lot of benefit to shareholders in terms of additional cash flows - and hence higher dividend payout specifically in cash rich companies .Plus at time it might increase competitive moat vis a vis larger firms in same industries

The Sales TO eligible for rebate in this budget has been increased from 250 cr to 400 cr

Lets look at firms that are eligible for that -

Large companies with ROCE > 10

High Dividend paying companies ROCE > 10 and with low or zero debt

Pl study individual firms before buying stocks … This theme is for investing horizon for less than 3 years as hopefully these companies will grow and their TO may go beyond sales TO threshold for Tax rebate .

Also there is chance that by end of their term GOVT may increase TO threshold giving these companies a longer runway …