Parul
After a gap of two years, India’s tax corporate collection exceeded 3 per cent in fiscal 2021-22 of the gross domestic product (GDP). Increased demand for goods and services was one of the reasons which made India Inc improve in profitability.
The net corporate tax collection was Rs 7.12 lakh crore in 2021-22 while GDP was at Rs 236.64 lakh crore at the current market price.
The percentage of net corporate tax to GDP is 3.01 per cent. This ratio was the highest in 2018-19, according to data on corporate tax collection for five years. The corporate tax collection of 2018-19 stood at Rs 6.63 lakh crore or 3.51 per cent of GDP.
In 28 years, the government had gone for the highest cut by almost 10 percentage points in corporate rates for new manufacturing units in 2019-20. The mop-up and ratio slipped to 2.77 per cent of GDP in 2019-20 on account of a reduction in the corporate tax rate.
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The government in September 2019 cut the tax rate and came out with a norm that any Indian company incorporated on or after October 1 that year, which makes a fresh investment in manufacturing, could pay income tax at 15 per cent if they start its production on or before March 31, 2023. This has been extended by one year.
Another norm was that if any domestic firm gave up exemptions and sops, they could pay taxes at a lower 22 per cent. In addition, the minimum alternate tax (MAT) too was cut to 15 per cent from 18.5 per cent.
20, when collections declined to Rs 5.56 lakh crore which was 2.77 per cent of GDP. The ratio of corporate tax to GDP during 2020-21 dropped further to 2.31 per cent due to the impact of Covid-19, coupled with tax rate cuts of the previous year. The net corporate tax collection during this year was Rs 4.57 lakh crore
