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Informist, Tuesday, Jul. 22, 2025

 

NEW DELHI – The government has forgone revenue to the tune of INR 3.67 trillion between 2019-20 (Apr-Mar) and FY24 on account of tax incentives in the form of various deductions in corporate tax, Minister of State for Finance Pankaj Chaudhary said Tuesday.

 

The government had forgone INR 80.43 billion in FY20, INR 752 billion in FY21, INR 969 billion in FY22, INR 881 billion in FY23, and INR 900 billion in FY24, Chaudhary said in a written reply to a question in the Rajya Sabha. Through Finance Acts, "the corporate tax rates have been gradually reduced while phasing out the exemptions and incentives available to the corporates," he said.

 

In the Finance Act, 2016, the government reduced corporate tax rates to 29% of total income from 30?rlier, and lowered it to 25% in the subsequent year. In 2019 again, the government lowered the corporate tax rate to 22%, with an effective rate of 25.17%, including surcharge and cess, for existing domestic companies not availing any incentive or deduction.

 

The government had also introduced concessional corporate tax rate of 15% for new manufacturing companies which have been set up or registered on or after October 2019 and which commenced manufacturing or production by Mar. 31, 2024 and did not avail any incentive or deductions. Further, in Finance Act, 2024, corporate tax rates for foreign companies have been reduced to 35% from 40%. 

 

Estimated revenue foregone for FY25 till date is not available, Chaudhary added. The Budget has projected total tax collections for FY26 at INR 42.702 trillion, up 10.8% from the revised estimate of the last fiscal. Of this, the government aims to collect INR 10.82 billion from corporate taxes. 

 

Data for FY25 showed that the government had missed the revised aim of total tax collections by INR 582 billion. This means, for the government to meet the target this year, collections will have to grow at a higher-than-budgeted pace of 12.5%.

 

Concerns about a possible slowdown in revenues emerged after the government's net direct tax collections for Apr. 1-Jun. 19 were down 1.4% on year at INR 4.59 trillion and to add to that, June's goods and services tax collections also grew only 6.2% on year--the slowest pace in four years. In another written reply to the Rajya Sabha Tuesday, Chaudhary said the "government does not foresee any shortfall in revenue at this stage and aims to achieve the targets fixed" in FY26 Budget.  End

 

Reported by Priyasmita Dutta

Edited by Tanima Banerjee

 

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