Corporate tax collections cross 3% of GDP in 2021-2022 after a gap of 2 years

new Delhi:

After a gap of two years, India’s corporate tax collection crossed 3 per cent of gross domestic product (GDP) in the fiscal year 2021-22.

Rising demand for goods and services was one of the reasons India Inc’s profitability improved.

The net corporate tax collection in 2021-22 was Rs 7.12 lakh crore, while the GDP at current market prices was Rs 236.64 lakh crore. 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 collections for the five-year period. Corporate tax collections for 2018-19 stood at Rs 6.63 lakh crore or 3.51 per cent of GDP.

In 28 years, the government had made the highest cut in corporate tax rates for new manufacturing units by about 10 percentage points in 2019-20. The reduction in corporate tax rate mopped up and the ratio fell to 2.77 per cent of GDP in 2019-20.

The government had cut the tax rate in September 2019 and made a rule that any Indian company incorporated on or after October 1 of that year, which makes fresh investments in the manufacturing sector, if they start their production Can pay income tax at 15 percent. On or before March 31, 2023. It has been extended for one more year.

Another criterion was that if a domestic firm gives up exemptions and exemptions, they can pay 22 per cent less tax. Besides this, the Minimum Alternate Tax (MAT) was also reduced from 18.5 per cent to 15 per cent.

Also, domestic companies were given the option to pay tax at a lower rate of 22 per cent by giving exemptions and incentives. In addition, the rate of Minimum Alternate Tax (MAT) has also been reduced from 18.5 per cent to 15 per cent. The tax cut was reflected in receipts of corporate taxes in 2019-20, when collections fell to Rs 5.56 lakh crore, which was 2.77 per cent of GDP.

The corporate tax to GDP ratio fell further to 2.31 per cent during 2020-21 due to the impact of COVID-19, as well as the cut in tax rates last year. The net corporate tax collection during the year stood at Rs 4.57 lakh crore.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)