New Delhi, July 23: The government is estimated to have foregone nearly ₹99,000 crore in revenue in 2023-24 due to corporate tax incentives, Minister of State for Finance Pankaj Chaudhary informed Parliament on Tuesday.In a written reply in the Rajya Sabha, Chaudhary said the total revenue foregone on account of various deductions in corporate tax was projected at ₹98,999 crore for the financial year 2023-24.
This is higher than the ₹88,109 crore revenue foregone in 2022-23, but slightly lower than ₹96,892 crore in 2021-22.
The revenue foregone in 2020-21 was ₹75,218 crore, while in 2019-20 it stood at ₹8,043 crore.
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).
The minister said the corporate tax rates have been gradually reduced over the years while phasing out exemptions and incentives.
Through Finance Act, 2016, the corporate tax rates were reduced to 29% of the total income to promote growth, boost investment and create more job opportunities.
In 2017, the corporate tax rates were reduced to 25% of the total income, make smaller domestic companies having annual turnover of ₹50 crore more viable and to encourage firms to migrate to company format.
In 2019, the government slashed tax rates to 22% (effective 25.17%) for existing domestic companies not availing any incentive or deduction, and to 15% (effective 17.16%) for new manufacturing companies set up after October 1, 2019.
Last year, the government also reduced tax rates for foreign companies from 40% to 35% to promote investment and employment.
However, the minister said no impact assessment has been conducted to evaluate the effectiveness of corporate tax cuts in promoting private investment, economic growth and employment generation.