For improving compliance, the taxpayer must believe that the tax rates and structure is something which is reasonable and moderate, said Akhilesh Ranjan.
MUMBAI: The corporate tax rate has hovered between 25% and 29% since FY14 at the aggregate level for a sample of 167 companies from the BSE 200 index that have domestic promoters. In FY19, the sample companies reported ₹1.9 lakh crore of tax outgo on profit of ₹6.6 lakh crore before taxes (PBT). This implies a tax rate of 29.1%.
According to the government’s estimates, it will forego ₹1.5 lakh crore due to a cut in the corporate tax to 25.17% after considering surcharge. A quick calculation suggests that the sample companies may save over 18% at the aggregate level in taxes for FY20. The sample reported ₹1.8 lakh crore in PBT and a tax outgo of ₹55,475 crore for the June 2019 quarter, implying a tax rate of 30.8%. Annualising these numbers, the tax outgo is estimated to be ₹2.2 lakh crore. After reducing the tax rate to 25.17%, the expected tax outgo will be ₹1.8 lakh crore.
In FY18, the aggregate tax rate for the sample had fallen to around 25% due to losses reported by some of the large public sector banks amounting to over ₹68,000 crore before taxes.
Budget 2015-16: Fiscal push, infra boost, new black money law, a long-awaited corporate tax cut
