**Summary:**
In response to Lok Sabha Unstarred Question No. 2494, the Ministry of Finance confirms an overall increase in direct tax collections following the reduction in corporate tax rates, effective from AY 2020-21, with the exception of FY 2020-21, which was affected by the COVID-19 pandemic. Net direct tax collections have shown consistent growth:
* 2019-20: ₹10,50,681 Crore (7.65% growth)
* 2020-21: ₹9,47,176 Crore (-9.85% growth)
* 2021-22: ₹14,12,422 Crore (49.12% growth)
* 2022-23: ₹16,63,686 Crore (17.79% growth)
* 2023-24: ₹19,60,166 Crore (17.82% growth)
* 2024-25: ₹22,26,375 Crore (13.58% growth)
The government, through amendments to the Income-tax Act (section 115BAA and section 115BAB), aims to create a globally competitive business environment, attract investment, and generate employment. The impact of section 115BAB is reflected in the growth of new manufacturing companies from 2,928 in AY 2022-23 to 7,185 in AY 2024-25. Furthermore, government initiatives to encourage startups have increased the number of startups claiming deduction under section 80IAC from 328 in AY 2022-23 to 877 in AY 2024-25. The number of companies covered under section 80JJAA regarding the employment of new employees has also increased from 2,838 in AY 2022-23 to 3,644 in AY 2024-25. Specific incentives are provided in the Income-tax Act through the Finance Bill.
These initiatives have resulted in employment generation, increased tax revenue, and overall economic growth. The total revenue impact due to tax benefits extended to companies was ₹88,109.27 Crores and ₹98,999.57 Crores in FY 2022-23 and FY 2023-24, respectively. The source for this data is the Receipt Budget 2025-26. These tax benefits aim to enhance corporate competitiveness, encourage investment, and foster economic growth.
Key Entities Referenced
SHRI SHASHANK MANI: Member of Parliament who raised the question about the impact of corporate tax reduction.
SHRI PANKAJ CHAUDHARY: Minister of State in the Ministry of Finance who provided the answer to the parliamentary question.
Taxation Laws Amendment Act, 2019: Act through which section 115BAA and section 115BAB were introduced in the Incometax Act.
section 115BAA: Section introduced in the Incometax Act through Taxation Laws Amendment Act, 2019 to create a globally competitive business environment.
section 115BAB: Section introduced in the Incometax Act through Taxation Laws Amendment Act, 2019 to attract fresh investment and create employment opportunities, impacting new manufacturing companies.
section 80IAC: Section in the Incometax Act related to deductions for startups.
section 80JJAA: Section in the Incometax Act related to employment of new employees.
Finance Bill: A bill that provides specific incentives in the Incometax Act.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
LOK SABHA
UNSTARRED QUESTION NO. 2494
TO BE ANSWERED ON MONDAY, AUGUST 04, 2025/SRAVANA 13, 1947 (SAKA)
IMPACT OF CORPORATE TAX REDUCTION
2494. SHRI SHASHANK MANI:
Will the Minister of FINANCE be pleased to state:
(a) whether there has been an overall increase in tax collections following the reduction in
corporate tax rates;
(b) if so, the details thereof including data on tax revenue growth, year-wise;
(c) whether the Government is considering specific incentives to attract more international
corporations, such as Apple and Google, to establish manufacturing unit in the country;
(d) if so, the details thereof;
(e) whether these initiatives are expected to impact tax revenue and economic growth; and
(f) if so, the details thereof?
ANSWER
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) & (b) Yes. There has been an overall increase in direct tax collections after reduction of
the corporate tax rates with effect from AY 2020-21 (except in FY 2020-21 being covid
affected year). The year-wise details of the net direct tax collection in the last five years are
as under:
(Rs. In Crore)
% Growth as compared to
Financial Year Net Direct Tax Collection
previous year
2019-20 10,50,681 -7.65%
2020-21 9,47,176# -9.85%
2021-22 14,12,422 49.12%
2022-23 16,63,686 17.79%
2023-24 19,60,166 17.82%
2024-25 22,26,375* 13.58%
Source: Pr. CCA (CBDT)
#Covid affected Year
*Provisional(c) to (f) In order to create a globally competitive business environment for domestic
companies, attract fresh investment and create employment opportunities, section 115BAA
and section 115BAB were introduced in Income-tax Act through Taxation Laws
(Amendment) Act, 2019. The impact of section 115BAB is reflected in a significant growth
of new manufacturing companies from 2,928 in AY 2022-23 to 7,185 in AY 2024-25.
To encourage start-ups, initiatives taken have resulted into an increase in the number of start-
ups claiming deduction under section 80IAC from 328 in AY 2022-23 to 877 in AY 2024-25.
Further, the number of companies covered under section 80JJAA in respect of employment of
new employees has increased from 2,838 in AY 2022-23 to 3,644 in AY 2024-25.
The specific incentives are provided in the Income-tax Act through Finance Bill. The
initiatives taken have led to generation of employment, increase in tax revenue and overall
economic growth.
The total revenue impact on account of tax benefits extended to companies was Rs. 88,109.27
Crores and Rs. 98,999.57 Crores (projected) in FY 2022-23 and FY 2023-24 respectively
(Source: Receipt Budget 2025-26). The above tax benefits have the impact of making the
corporates competitive and encouraging investment and therefore economic growth.
*****