new delhi moodys investors service on saturday said the cut in corporate tax increases the governments fiscal risks while headwinds from cyclical factors such as rural stress weak corporate sentiment and slow credit pose threat to nearterm growthon friday the centre announced a reduction in the base corporation tax rate to 22 per cent from 30 per cent as part of stimulus measures to revive slowing economic growthread also3rd budget in 8 months and the biggest government cuts corporate tax to historic lowthe govt on friday announced a rs 145 lakh crore fiscal stimulus that includes slashing corporate tax to 22 from 295 for companies that do not seek exemptions 15 for new manufacturing startups as well a cut down on mat minimum alternate tax the govt has opted to promulgate an ordinance toslowdown gives india inc what budget didntthe sharp cut brings indias corporate tax rate on par with the global average of 2379 and closer to the asian average of 2109 the move will also help pitch india as a manufacturing destination to companies looking for alternatives to china the 15 tax for new manufacturing firms in indiain governments growth push some fiscal painthe sharp cut in corporate tax rates unveiled by finance minister nirmala sitharaman on friday poses a risk for the fiscal deficit target budgeted at 33 of gross domestic product the cuts in corporate tax rates have come at a time when collections of both direct and indirect taxes have beenthe 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 revenuewhile the reduction brings indias 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 nearterm growth it saidmoodys said the cut in corporate tax is credit positive for companies because it will enable them to generate higher posttax incomes however it is credit negative for the sovereign as it aggravates mounting risks for the government in meeting its fiscal deficit targetcommodity and information technology it services companies will benefit most from the tax rate cutbut the degree of strengthening in corporate credit profiles will depend on whether companies reinvest surplus earnings into their businesses or use them to reduce debt or to boost shareholder returns it saidin aggregate rated nonfinancial companies in india reported a total pretax net income of about usd 35 billion for the fiscal year ended march 2019assuming the earnings of these companies remain unchanged for current fiscal they will save about usd 3 billion from the tax rate reductionthe central government deficit target of 33 per cent of gdp in fiscal 2019 already assumes faster economic growth and higher tax buoyancy than we expect it saidthe july budget projected total corporate tax revenue of rs 77 lakh crore around 4