Finance minister defends corporate tax rate cut in 2019, saying Rs 7.3 lakh crore has been levied so far in FY22

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Finance Minister Nirmala Sitharaman defended the government’s decision to cut the corporate tax rate in September 2019, saying the benefits were now becoming evident and flowing to the economy, government and businesses. “Our corporate tax collections in 2018-19 were barely around Rs 6.6 lakh crore. Then there was COVID. Despite the (tax) cut and the COVID effect, we already collected Rs 7.3 lakh crore in corporation tax yesterday,” Sitharaman said in the Lok Sabha. The finance minister was answering a question during a debate on the 2022 finance bill, which was passed by the lower house on March 25.

Higher-than-expected corporate tax collections are in line with expectations, with the 2022 budget figures widely seen as extremely conservative. Full data on government finances for FY22 will not be released until late May. Refuting criticism over the increased tax burden for the common man, the finance minister said the government had made a conscious decision not to fund the post-pandemic recovery of the economy through additional taxes. “I want to rely on reports from the OECD (Organization for Economic Co-operation and Development), which have very clearly indicated that at least 32 countries have increased various tax rates during the pandemic. India did not.

In September 2019, the government gave businesses the option to switch to a lower basic rate of 22% instead of 30%. The corporate tax levied so far this fiscal year, as mentioned by Sitharaman, is 15% higher than the government’s revised estimate of Rs 6.35 lakh crore for FY22. fact, it is also above the target of Rs 7.2 lakh crore set for FY23.

“Which countries have had to depend on tax hikes to meet the expenses of the pandemic? They are absolutely developed countries, big countries like Germany, France, Canada, UK and Russia, except for many smaller economies. The clear instruction, the first guidance I received while preparing the 2021 and 2022 budgets was that we would not go down the road of taxation,” Sitharaman said. Defending the government’s position that discussions are needed before adopting a final position on crypto and the budget proposal to impose a 1% withholding tax (TDS) on transactions involving these assets, the Minister of Finance said the TDS is “more for tracking”. .

“It’s not an additional tax. It is not a new tax. It’s a tax that will help people follow up. But at the same time, for the payer, he can always reconcile it with the total tax he has to pay to the government”. “There is no new taxation because of the TDS (on crypto). The TDS principle has always been the same. And that is probably also one of the reasons why the tax base has expanded in general. Where we only had about 5. something (crore) earlier in 2014, we are now reaching 9.1 crore people,” Sitharaman said.

Summary of news:

  • Finance minister defends corporate tax rate cut in 2019, saying Rs 7.3 lakh crore has been levied so far in FY22
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