Reduction in Corporate tax rate caused losses over Rs 1 lakh crore per year
No proposal to review
The government admitted in Rajya Sabha that reduction in corporate tax from 30% to 22% has resulted in losses to the tune of Rs. 128,170 crores during the financial year 2019-20. The estimated losses during the financial year 2020-21 has come down to Rs. 100,241 crores. The year also saw a resurgence in corporate tax collections as it showed growth of about 56% as compared to the tax collection during the financial year 2020-21. The government said that the corporate tax collection during 2021-22 was even higher at Rs 7.12 lakh crore. This was far higher compared to 2018-19. The current year has further shown buoyancy in corporate tax collection so far which is due to economic growth and new investment as a result of reduction in corporate tax.
As mentioned in the Statement of Revenue Impact of Tax Incentives under the Central Tax System in the Receipt Budget 2023-24, 61% of the reported aggregated total income of all companies has opted for the new concessional tax scheme under section 115BAA of the Income-tax Act, 1961 for FY 2020-21.
The Minister of State for Finance Pankaj Chaudhary said, "As mentioned in the Statement of Revenue Impact of Tax Incentives under the Central Tax System in the Receipt Budget 2022-23, 62% of the reported aggregated total income of all companies has opted for the new concessional tax scheme under section 115BAA of the Income-tax Act, 1961 for FY 2019-20.
In response to a spate of questions posed by A A Rahim in the Rajya Sabha who wanted to know whether the government estimated the revenue loss due to the reduction in Corporate tax from 30 per cent to 22 per cent in 2019-20 and if so, the amount of revenue loss for 2020 and 2021, the minister admitted that collections were less than estimated. But with growth picking up the corporate tax collections will rise during 2023-24. The government also made it clear that there is no proposal to revise the corporate tax rate in view of losses incurred.
