Lok Sabha Question No. 5907 (UNSTARRED), answered on 2026-03-30
Subject: Fiscal Impact of Corporate Tax Reductions
Ministry: FINANCE
Asked by: Shri Pushpendra Saroj

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA UNSTARRED QUESTION NO.5907

TO BE ANSWERED ON MONDAY, MARCH 30, 2026/ CHAITRA 09, 1948 (SAKA)

## Fiscal Impact of Corporate Tax Reductions

## 5907.  Shri Pushpendra Saroj:

Will the Minister of FINANCE be pleased to state:

(a)  the  increase  in  private  capital  expenditure  and  employment  generation  recorded  by companies that benefited from the reduced corporate tax regime since 2019, sector-wise;

(b) whether the Government has undertaken any assessment of comparing the magnitude of revenue foregone with the actual increase in investment, manufacturing output and job creation attributable to the tax reductions, if so, the details thereof;

(c) the distribution of new private investment projects and employment created by companies availing the reduced corporate tax rates, State-wise and particularly for Uttar Pradesh; and (d) the policy measures proposed by the Government to ensure that corporate tax concessions translate  into  measurable  increases  in  productive  investment,  manufacturing  expansion  and employment generation rather than primarily improving corporate profitability?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

(a) to (c) The Government reduced the corporate income tax rate for domestic companies in September 2019 with an intent to attract fresh investment, create jobs and stimulate overall economic growth. As per the estimates released by the Ministry of Statistics and Programme Implementation (MoSPI), gross fixed capital formation (GFCF) by the private corporate sector at current prices had risen from ₹21.7 lakh crore in 2019-20 to ₹30.3 lakh crore in 2023-24 at current prices (based on the old series (Base year 2011-12)). Under the new series (Base Year 2022-23), GFCF continues to rise from ₹28.5 lakh crore in 2022-23 to ₹29.7 lakh crore in 202324 and ₹32.4 lakh crore in 2024-25.

The  manufacturing  sector  has  exhibited  robust  performance  in  recent  years,  supported  by policy measures such as the reduction in corporate tax rates. As a result, the sector has recorded, on average, double-digit growth in recent years. Under the new series of GDP estimates (base year 2022-23), the Manufacturing Gross Value Added (current prices) has gone up from ₹ 34.8 lakh crore in 2022-23 to ₹ 46.5 lakh crore in 2025-26.

The employment situation has also improved in the country in the past years. According to the annual PLFS  by the National Statistical Organisation, MoSPI, the all-India annual unemployment rate (UR) (persons aged 15  years and above, as per usual status) has been declining from 5.8 per cent in 2018-19 to 3.2 per cent in 2023-24. This has been accompanied by a rise in labour force participation rate from 50.2 per cent in 2018-19 to 60.1 per cent in 2023-24. The Worker population ratio has also increased from 47.3 per cent in 2018-19 to 58.2 per cent in 2023-24. However, the disaggregated state-wise data of new private investment projects and employment created by companies availing the reduced corporate tax rates is not maintained by the Ministry of Statistics and Programme Implementation.

The  corporate  tax  reforms  have  also  contributed  to  higher  corporate  tax  revenues  for  the Government by improving corporate profitability and strengthening balance sheets. According to the Reserve Bank of India, aggregate corporate profits of listed companies have increased from around ₹2.5 trillion in 2020-21 to ₹7.1 trillion in 2024-25, resulting in an increase in corporate tax collections from ₹4.58 lakh crore to ₹9.87 lakh crore over this period.

(d) The Government has put in place a comprehensive policy framework to ensure that corporate  tax  concessions  translate  into  productive  investment,  manufacturing  growth  and employment generation. This includes Production-Linked Incentive (PLI) schemes across 14 sectors  linking  incentives  to  incremental  output,  a  sustained  increase  in  public  capital expenditure from ₹4.3 lakh crore in 2020-21 to ₹12.2 lakh crore in 2026-27 (BE) to crowd in private investment, and sector-specific initiatives such as the India Semiconductor Mission 1.0 and 2.0 and National Green Hydrogen Mission. These are complemented by Ease of Doing Business reforms, including GST simplification, labour codes  and reduction in compliance burden, along with employment-linked incentives and skilling programmes such as the Prime Minister's  Employment  and  Skilling  Package,  aimed  at  ensuring  that  investment  growth translates into measurable employment outcomes.

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