Highlight
- Tax on corporate income increased by 34% in the first 4 months of the current financial year
- This indicates that a simpler tax regime with lower rates is yielding results, the Income Tax Department said.
- Corporate tax collection at Rs 7.23 lakh crore was 58% higher in FY 2021-22
business News: Tax collections on income of companies increased by 34 per cent in the first four months of the current fiscal, which began in April, indicating that a simpler tax regime with lower rates is yielding results, the Income Tax Department said.
The tax department tweeted on the increase in corporate tax collections in April-July, an apparent attempt to criticize the 2019 reduction in tax rates for companies, which was allegedly dented by the Centre’s revenue collections, on social welfare schemes It was accused of influencing its expenditure.
The tax department said that the corporate tax collection in the financial year 2021-22 (April 2021 to March 2022) stood at Rs 7.23 lakh crore, which was 58 per cent higher than the collection in the previous financial year.
“Corporate tax collection during FY 2022-23 (up to July 31, 2022) registers a strong growth of 34 per cent as compared to corporate tax collection in the same period of FY 2021-22,” it said without giving an absolute number. . collection.
Tax collection is one of the indicators of economic activity as higher incomes of companies suggest increased demand and wealth creation.
The corporate tax collection in 2021-22 was more than 9 per cent as compared to the pre-COVID 2018-19 fiscal collection, the department said.
“The positive growth trend continues (in the current fiscal), but for the overall impact of the COVID-19 pandemic during FY 2020-21, when corporate tax collections took a temporary hit,” it said.
“This indicates that the simplified tax regime with lower rates and no exemptions has lived up to its promise.”
In September 2019, the government had given companies an option to switch from the 30 per cent lower base rate to 22 per cent, waiving all exemptions.
This led to a decline of 16 per cent in corporate tax collections to Rs 5.57 lakh crore in 2019-20. But the fall was around Rs 1 lakh crore, not Rs 1.45 lakh crore, as was feared at the time.
Tax collection in 2020-21 was affected due to the pandemic.
While the ruling BJP and Prime Minister Narendra Modi have launched a massive campaign against freebies like free electricity and water, which they say lead to the bankruptcy of a state, the Aam Aadmi Party (AAP) has launched a counter-attack. The ruling government has been accused of giving Donations to corporate in the form of reduced taxes and waiver of their debts.
The heated debate over freebies takes place before elections in states like Gujarat. AAP wants to challenge the ruling BJP in the state with its Delhi model of development where electricity and water consumption up to a certain level is free. BJP seems to be against election promises made without considering the financial condition of a state.
(with PTI inputs)
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