Corporate tax rates have been gradually reduced since 2016 while phasing out the exemptions and incentives.
In a written reply in the Rajya Sabha, Chaudhary gave the estimated revenue forgone due to the tax incentives by way of various deductions in corporate tax, from FY 2019-20 to 2023-24.
The corporate tax revenue foregone in 2023-24 stood at Rs 98,999, followed by Rs 88,109 crore and Rs 96,892 crore in 2022-23 and 2021-22, respectively.
In 2020-21 and 2019-20, the total corporate tax revenue foregone was Rs 75,218 crore and Rs 8,043 crore respectively.
The minister was replying to a question from AAP MP Raghav Chadha on the estimated loss to the exchequer due to the corporate tax reductions from 2019-20 to 2024-25, and for the financial year (2024-25). Estimated revenue foregone for the financial year 2024-25 till date is not available, Chaudhary said. Through Finance Act, 2016, the corporate tax rates were reduced to 29 per cent of the total income to promote growth, boost investment and create more job opportunities.
In 2017, the corporate tax rates were reduced to 25 per cent of the total income, make smaller domestic companies having annual turnover of Rs 50 crores more viable and to encourage firms to migrate to company format.
In September 2019, the government announced a cut in base corporate tax for then existing companies to 22 per cent from 30 per cent; and for new manufacturing firms, incorporated after October 1, 2019, to 15 per cent from 25 per cent, provided they forego all exemptions and incentives.
Vide Finance Act, 2024, tax rates on the income of foreign companies (other than that chargeable at special rates) have been reduced from 40 per cent to 35 per cent to promote investment and employment.
