The Central Board of Direct Taxes (CBDT) on Sunday clarified that the annualised gross direct tax collection growth in 2019-20 was actually 8% at ₹14,01,920 crore, but tax reforms worth ₹1,68,200 croreannounced last year had led to about 5% contraction in overall tax receipts in the previous financial year.
The revenue impacts of corporate tax reforms and personal income tax concessions were ₹1,45,000 crore and ₹23,200 crore, respectively.
After adjusting the revenue losses due to the two reforms actual gross direct tax collection in 2019-20 was ₹12,33,720 crore, a 4.92% contraction compared to ₹12,97,674 crore in 2018-19, it said in a statement.
Last year, finance minister Nirmala Sitharaman had slashed corporate tax rates substantially to promote investment growth and provided tax reliefs to individuals through raising standard deduction and increasing personal income tax exemption limit.
In order to boost investments, the government in September last year gave a ₹1.45 lakh crore bonanza to the industry by drastically reducing corporate tax rates. Accordingly, existing firms had option for a lower corporate tax rate of 22% (15% to newly incorporated companies) provided they forgo exemptions. Those interested in exemptions could pay the tax at 30% (25% for new firms).
The Finance Act, 2019 also 100% tax rebate to individual taxpayers earning taxable income up to ₹5 lakh and enhanced the standard deduction from ₹40,000 to ₹50,000 having a total revenue implication of ₹23,200 crore.
