The tax department said corporate tax recoveries at Rs 7.23 lakh crore in the financial year 2021-22 (April 2021 to March 2022) were 58% higher than the catch-up in the previous financial year .
“Corporate tax recoveries in fiscal year 2022-23 (through July 31, 2022) show robust growth of 34% compared to corporate tax recoveries in the corresponding period of fiscal year 2021-22,” he said without giving an absolute figure for the collection.
Tax receipts are one indicator of economic activity, as higher business revenues suggest demand growth and wealth creation.
The ministry said corporate tax collection in 2021-22 was more than 9% higher than collections in the pre-COVID fiscal year 2018-19.
“The positive growth trend continues (in the current fiscal year), but for the overall impact of the COVID-19 pandemic in fiscal year 2020-21, when corporate tax collections were temporarily affected,” he said. “This indicates that the simplified tax regime with low rates and no exemptions has delivered.”
In September 2019, the government gave companies the option to switch to a lower basic rate of 22% to 30% while waiving all exemptions.
This led to a 16% decline in corporate tax collections in 2019-20 to Rs 5.57 lakh crore. But the drop was around Rs 1 lakh crore and not Rs 1.45 lakh crore as feared at the time.
Tax collections in 2020-21 have been affected due to the pandemic.
While the ruling BJP and Prime Minister Narendra Modi have launched a major offensive against freebies such as free electricity and water which they say lead to state failure, the Aam Aadmi Party (AAP ) has, in a counteroffensive, blamed dispensation to power to give stipends to companies in the form of lower taxes and waiving their loans.
The heated debate over the giveaways comes before states like Gujarat go to the polls. AAP seeks to challenge the ruling BJP in the state with its Delhi development model where electricity and water consumption up to a certain level is free. The BJP seems to be against election promises made without regard to the fiscal health of a state.