## Summary of Lok Sabha Unstarred Question No. 1184 Regarding Revenue Loss Due to Tax Exemptions/Deductions
This document summarizes the response provided by the Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary, to Lok Sabha Unstarred Question No. 1184, answered on July 28, 2025, concerning revenue loss attributable to tax exemptions, deductions, and incentives. The question was posed by Shri Charanjit Singh Channi, Shri Tanuj Punia, and Shri Balwant Baswant Wankhade.
The response provides data on revenue forgone due to direct and indirect tax incentives from Financial Year 2019-20 to 2023-24.
**Direct Taxes (in Rs. Crore):**
The total revenue loss from direct tax incentives is broken down as follows:
| Financial Year | Incentives for Corporate Taxpayers (A) | Incentives for Non-Corporate Taxpayers (B) | Incentives for Firms/AOPs/BOIs (C) | Grand Total (A+B+C) |
|---|---|---|---|---|
| 2019-20 | 94,109.83 | 8,043.07 | 155,429.45 | 257,582.35 |
| 2020-21 | 75,218.02 | 7,731.61 | 128,244.23 | 211,193.86 |
| 2021-22 | 96,892.39 | 9,018.68 | 168,566.30 | 274,477.37 |
| 2022-23 | 88,109.27 | 10,920.83 | 196,678.95 | 295,709.05 |
| 2023-24 (Projected) | 98,999.57 | 12,270.64 | 220,988.47 | 332,258.68 |
**Indirect Taxes (in Rs. Crore):**
The revenue impact of indirect tax incentives, specifically customs duties, is as follows:
| Year | Customs Total |
| ----------- | ----------- |
| 2019-20 | 79,114 |
| 2020-21 | 62,773 |
| 2021-22 | 37,680 |
| 2022-23 | 33,986 |
| 2023-24 (Projected) | 37,252 |
Regarding the impact of tax incentives on employment generation, capital investment, wage growth, innovation, or regional development, the Minister stated that no specific review has been conducted. However, the government's stated policy is to phase out exemptions and incentives and simplify the tax structure. The response notes the reduction in corporate tax rates initiated in the Finance Act, 2016, and the option provided to corporates via the Taxation Laws Amendment Act, 2019, to pay a concessional tax rate of 22% if they forgo specified deductions or incentives. The government considers taxation rates, exemptions, and tax incentives as part of its overall fiscal policy aimed at holistic economic growth.
Key Entities Referenced
Ministry of Finance: A department of the Government of India responsible for financial matters.
Lok Sabha: The lower house of the Parliament of India.
SHRI CHARANJIT SINGH CHANNI: Member of Parliament who raised a question in the Lok Sabha.
SHRI TANUJ PUNIA: Member of Parliament who raised a question in the Lok Sabha.
SHRI BALWANT BASWANT WANKHADE: Member of Parliament who raised a question in the Lok Sabha.
SHRI PANKAJ CHAUDHARY: Minister of State in the Ministry of Finance.
Finance Act, 2016: An act related to financial matters passed in 2016
Taxation Laws Amendment Act, 2019: An act that amends taxation laws, passed in 2019.
Government of India
Ministry of Finance
Department of Revenue
LOK SABHA
UNSTARRED QUESTION NO. 1184
TO BE ANSWERED ON MONDAY, JULY 28, 2025/SRAVANA 6, 1947 (SAKA)
REVENUE LOSS DUE TO TAX EXEMPTIONS/DEDUCTIONS
1184. SHRI CHARANJIT SINGH CHANNI:
SHRI TANUJ PUNIA:
SHRI BALWANT BASWANT WANKHADE:
Will the Minister of FINANCE be pleased to state:
(a) the total revenue loss on account of tax exemptions, deductions, and incentives extended
to corporate and other categories of taxpayers under various heads since Financial Year 2019,
category-wise;
(b) the sector-wise and industry-wise details of revenue loss during the said period,
particularly in high-incentive sectors such as infrastructure, manufacturing, IT, and renewable
energy;
(c) whether the Government has reviewed the impact of these tax incentives in terms of
employment generation, capital investment, wage growth, innovation or regional
development; and
(d) if so, the details thereof and the corrective measures proposed to be taken by the
Government in this regard?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) to (b): Total Revenue loss on account of tax exemptions, deductions and incentives in
respect of Direct Taxes:
Revenue Forgone from F.Y 2019-20 to 2023-24 (Direct Taxes)
(In Rs. Crore)
Financial Major Tax Major Tax Major Tax Grand Total
Year Incentives for Incentives for Non- Incentives for (A+B+C)
Corporate Corporate Individual HUF
Taxpayers Taxpayers Taxpayers (C)
(A) (Firms/AOPs/BOIs)
(B)
2019-20 94109.83 8,043.07 1,55,429.45 2,57,582.35
2020-21 75,218.02 7,731.61 1,28,244.23 2,11,193.86
2021-22 96,892.39 9,018.68 1,68,566.30 2,74,477.37
2022-23 88,109.27 10,920.83 1,96,678.95 2,95,709.05
2023-24 98,999.57 12,270.64 2,20,988.47 3,32,258.68
(Projected)Total Revenue loss on account of tax exemptions, deductions and incentives in respect of
Indirect Taxes:
Revenue impact of tax incentives (Indirect Taxes)
(In Rs. Crore)
Year Customs Total
2019-20 79,114 79,114
2020-21 62,773 62,773
2021-22 37,680 37,680
2022-23 33,986 33,986
2023-24 37,252 37,252
(c) & (d): No such review has been carried out. Phasing out the exemptions and incentives
available to various taxpayers and simplifying the tax structure is the stated policy of the
Government. Starting from the Finance Act, 2016, the corporate tax rates have been gradually
reduced. Vide Taxation Laws (Amendment) Act, 2019, an option has been provided to
corporates to pay tax at concessional rate of 22% if they do not avail specified deductions or
incentives.
Taxation rates, exemptions and tax incentives in terms of employment generation,
capital investment, wage growth, innovation or regional development are part of the overall
fiscal policy of the Government which aims at holistic growth of the economy.
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