How Did India's Corporate Tax Collection Surge Over 200% in Just Four Years?
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Synopsis
In just four years, India's corporate tax collection has skyrocketed over 200%, demonstrating resilience and recovery post-Covid. This surge is driven by strategic tax reforms and a robust increase in corporate profits, highlighting a successful fiscal strategy amid challenging economic conditions.
Key Takeaways
- Corporate tax collection has increased over 200% in four years.
- Net profits surged significantly post-Covid.
- Corporate tax rates were reduced to encourage growth.
- Measures to broaden tax compliance have been implemented.
- Strategic reforms are driving economic recovery.
New Delhi, Dec 2 (NationPress) The corporate tax revenue in India has impressively increased by over 200%, rising from Rs 4,57,719 crore in the fiscal year 2020-21 to Rs 9,86,767 crore in 2024-25, as reported to Parliament on Tuesday.
The Minister of State for Finance, Pankaj Choudhary, disclosed this during a written reply in the Rajya Sabha, referencing an article by the RBI titled "Resilience and Revival: India’s Private Corporate Sector" in its October 2025 monthly bulletin. The article noted that during the Covid pandemic, despite a decline in sales, net profit surged by 115.6% due to decreased raw material costs, sluggish wage growth, and a favorable base effect.
As a result, net profit margins exceeded pre-Covid levels. In the post-Covid era, spurred by pent-up demand, corporate profits soared from Rs 2.5 lakh crore in 2020-21 to Rs 7.1 lakh crore by 2024-25.
The significant rise in corporate taxes from FY 2020-21 to FY 2024-25 occurred despite a reduction in corporate tax rates, as highlighted by the minister.
Chaudhary emphasized that corporate tax rates have been gradually lowered since 2016 to foster growth, attract investment, and create additional job opportunities. Concurrently, the government has phased out numerous exemptions and incentives to streamline the tax system.
The Finance Act of 2016 initially lowered corporate tax rates to 29%. Later, the Finance Act of 2017 further reduced these rates to 25% for smaller domestic companies with annual turnovers up to Rs 50 crore. In 2019, corporate tax rates were subsequently lowered to 22%.
Additionally, the Finance Act of 2024 decreased tax rates for foreign companies from 40% to 35% (excluding those charged at special rates) to stimulate investment and job creation.
The minister pointed out that the expansion of the tax base over the years is attributed to various legislative, administrative, and enforcement measures aimed at enhancing voluntary compliance and broadening the tax net.
These initiatives include the NUDGE (Non-intrusive usage of data to guide and enable) campaigns to improve taxpayer compliance and assist with income tax return (ITR) reviews and corrections.
Moreover, the expansion of TDS and TCS provisions to cover additional financial transactions, along with improved third-party financial transaction reporting to detect tax evasion, were other significant measures.
The implementation of a non-filers monitoring system (NMS) to identify potential taxpayers using third-party data and the mandatory quoting and linking of PAN and Aadhaar numbers also contributed to the expanded tax base.
Additionally, actions have been taken to combat the generation and use of black money through legislation such as the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 and the Benami Transactions (Prohibition) Amendment Act, 2016.
Furthermore, promoting voluntary compliance through enhanced taxpayer services, swift grievance resolution, and facilitating ease of tax payments and return filings, as well as digital transaction promotion, have also been employed to boost tax revenue, the minister concluded.
Point of View
It is crucial to recognize the significance of India's remarkable growth in corporate tax collection. This success story reflects the government's commitment to economic revitalization, promoting investment, and enhancing voluntary compliance. The increase in revenue not only showcases resilience but also sets the stage for future economic stability and growth.
NationPress
02/12/2025
Frequently Asked Questions
What has caused the increase in corporate tax collection in India?
The increase in corporate tax collection is primarily due to a rise in corporate profits, strategic tax reforms, and measures taken to broaden the tax base.
How much did corporate tax collection increase from 2020-21 to 2024-25?
Corporate tax collection increased from Rs 4,57,719 crore in 2020-21 to Rs 9,86,767 crore in 2024-25, which is over a 200% increase.
What measures has the government taken to improve tax compliance?
The government has implemented campaigns like NUDGE, expanded TDS and TCS provisions, and introduced the non-filers monitoring system to enhance tax compliance.
What are the corporate tax rates in India now?
The corporate tax rates have been gradually reduced, with the current rate for domestic companies being 22%, and for foreign companies, it has been reduced to 35%.
How has the pandemic affected corporate profits in India?
Despite the pandemic, corporate profits rose sharply due to reduced raw material costs and pent-up demand, leading to a significant increase in tax collection.
