Lok Sabha Question No. 18 (STARRED), answered on 2025-02-03
Subject: Tax Collection after Reduction in Corporate Tax Rates
Ministry: FINANCE
Asked by: Shri Bhartruhari Mahtab, Shri Balabhadra Majhi

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

## LOK SABHA STARRED QUESTION NO. *18

TO BE ANSWERED ON MONDAY, FEBRUARY 3, 2025/MAGHA 14, 1946 (SAKA)

## TAX COLLECTION AFTER REDUCTION IN CORPORATE TAX RATES

*18. Shri Bhartruhari Mahtab Shri Balabhadra Majhi: Will the Minister of FINANCE be pleased to state:

- (a) whether  there  has  been  an  overall  increase  in  tax  collection  and  foreign  investment inflows after reduction in corporate tax rates, if so, the details thereof, year-wise;
- (b) the industry-wise details of tax benefits extended and their impact on economic growth;
- (c) the specific incentives being considered by the Government to attract more international corporations like Apple, Google and Tesla to establish manufacturing unit in the country; and
- (d) the  manner  in  which  these  initiatives  impact  tax  revenue  and  economic  growth  to achieve the India's vision of becoming $5 trillion economy?

## ANSWER

THE FINANCE MINISTER (SMT. NIRMALA SITHARAMAN)

- (a) to (d): A statement is laid on the Table of the House.

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Statement referred to in reply to parts (a) to (d) in respect of LOK SABHA STARRED QUESTION NO. *18 for reply on 03.02.2025 regarding Tax collection after reduction in corporate tax rates asked by Shri Bhartruhari Mahtab & Shri Balabhadra Majhi.

## (a) Yes.

There has been an overall increase in direct tax collections after reduction of the corporate tax rates with effect from AY 2020-21 (except in FY 2020-21 being covid affected year). The year-wise details of the net direct tax collection in the last five years are as under:

(Rs. In Crore)

| Financial Year             | Net Direct Tax Collection   |
|----------------------------|-----------------------------|
| 2019-20                    | 10,50,681                   |
| 2020-21                    | 9,47,176 #                  |
| 2021-22                    | 14,12,422                   |
| 2022-23                    | 16,63,686                   |
| 2023-24                    | 19,60,166*                  |
| 2024-25 (up to 31.12.2024) | 16,14,572*                  |

Source: Pr. CCA (CBDT)

#Covid affected Year

*Provisional

The  Net  Foreign  Investment  Inflows  have  increased  from  USD  44,417  (in  Million)  in  FY 2019-20 to USD 53,105 (in Million) in FY 2023-24 [As per data available on the website of Reserve Bank of India (https://data.rbi.org.in/)].

- (b) The domestic companies are provided certain tax benefits under different provisions of the Income-tax Act in the Old tax regime which interalia are as under:

|   S.No | Nature of tax benefit                                                                                                                                                                                                                                                                                                                          |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|      1 | Deduction of export profits to units/undertakings located in SEZs                                                                                                                                                                                                                                                                              |
|      2 | Deduction/weighted deduction for expenditure on scientific research                                                                                                                                                                                                                                                                            |
|      3 | Deduction for a specified business with fulfillment of certain conditions related to Petroleum &Natural Gas                                                                                                                                                                                                                                    |
|      4 | Deduction of profits of undertakings engaged in development of infrastructure facilities, generation, transmission and distribution of power and undertakings engaged in revival of power plant or providing telecommunication services                                                                                                        |
|      5 | Deduction of profits of industrial undertakings derived from the following-  production of mineral oil and natural gas  housing projects  integrated business of handling, storage and transportation of food grains  processing, preservation and packaging of fruits and vegetables  collecting and processing of bio- degradable waste |

|   6. | Deduction for Offshore Banking Units [OBUs] and International Financial Services Centre [IFSC]   |
|------|--------------------------------------------------------------------------------------------------|
|    7 | Deduction for undertakings setup in North Eastern states and Sikkim                              |
|    8 | Deduction for employment of new workmen                                                          |
|    9 | Deduction for eligible start-ups                                                                 |
|   10 | Deduction for Dividend received                                                                  |

The total revenue impact on account of tax benefits extended to companies was Rs. 96,892.39 Crores and Rs. 1,09,333.38 Crores (projected) in FY 2021-22 and FY 2022-23 respectively (Source:  Receipt  Budget  2024-25).  The  above  tax  benefits  have  the  impact  of  making  the corporates competitive and encouraging investment and therefore economic growth.

(c) The  specific incentives to be provided in the Income-tax  Act  as considered appropriate form part of the Finance Bill.

(d) In order to create a globally competitive business environment  for domestic companies, attract fresh  investment and create  employment opportunities, section 115BAA and section 115BAB were introduced in Income-tax Act through Taxation Laws (Amendment) Act, 2019. The impact of section 115BAB is reflected in a  significant growth of new manufacturing companies from 2,928 in AY 2022-23 to 7,185 in AY 2024-25.

To encourage start-ups, initiatives taken have resulted into an increase in the number of startups claiming deduction under section 80IAC from 328 in AY 2022-23 to 877 in AY 2024-25. Further, the number of companies covered under section 80JJAA in respect of employment of new employees has increased from 2,838 in AY 2022-23 to 3,644 in AY 2024-25.

The  initiatives  taken  have  led  to  generation  of  employment,  increase  in  tax  revenue  and overall economic growth.

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