Government lost Rs 1 lakh crore in taxes in FY21 due to corporate tax cut: Minister Pankaj Chaudhary

In the fiscal year 2020-21, the government incurred a loss of slightly over Rs 1 lakh crore due to a reduction in corporate taxes, as disclosed by Pankaj Chaudhary, the Minister of State for Finance. The government's decision, announced in September 2019, involved decreasing the base corporate tax rate for pre-existing companies from 30% to 22%, and for newly established manufacturing companies incorporated after October 1, 2019, from 25% to 15%. To avail of these revised tax rates, companies had to waive all exemptions and incentives previously applicable.

When accounting for additional charges and cess like the Swachh Bharat cess and education cess, which are levied in addition to income and corporate tax rates, the effective tax rate for existing companies lowered to 25.17% from the previous 34.94%, and for new companies, it reduced to 17.01% from 29.12%.

Responding in writing to the Rajya Sabha, Minister Chaudhary indicated that the estimated revenue loss resulting from the reduction in corporate taxes during the fiscal year 2020-21 had been reevaluated to be Rs 100,241 crore. Earlier, in February, the Minister had informed the Parliament that the revenue loss for the fiscal year 2019-20 due to the decrease in corporate tax from 30% to 22% amounted to Rs 1,28,170 crore.

According to Chaudhary's disclosure of corporate tax collection data, provisional revenues for the fiscal year 2022-23 exceeded Rs 8.28 lakh crore, surpassing the amount of over Rs 7.12 lakh crore collected in the previous fiscal year 2021-22. Corporate tax collection figures for the years 2018-19 and 2019-20 were Rs 6.63 lakh crore and Rs 5.56 lakh crore, respectively.