Tax %

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Tax %

Explanation: In the income statement, “Tax %” calculated from pre-tax income refers to the effective tax rate applied to the company’s pre-tax income to determine the amount of taxes owed. It represents the percentage of pre-tax income that is paid as taxes.

Example: In FY 2023, TCS (Tata Consultancy Services) had a tax rate of 25.66%. This means that for every rupee of pre-tax income earned by TCS, approximately 25.66% was paid in taxes.

The tax % calculated from pre-tax income is a crucial metric as it provides insights into the company’s tax efficiency and helps assess its tax burden relative to its pre-tax earnings. A higher tax % indicates that a larger portion of the company’s pre-tax income is being allocated towards taxes, while a lower tax % suggests a lower tax burden.

Overall, the tax % calculated from pre-tax income aids investors, analysts, and stakeholders in understanding the company’s tax management strategies and evaluating its financial performance.

You can view the quarterly and annual Tax % for any company on Radar in the Quarterly Results and Yearly P/L sections.

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