Highly-placed Finance Ministry officials told The Hindu that high inflation had eroded the profitability of business and trade, in turn depressing the buoyancy in the Centre’s collections of corporate income tax. As a result, though there has been an increase in corporate income tax in percentage terms during 2013-14, the buoyancy remains less than one, they said.
On the other hand, these factors, however, do not affect wages and salaries, which mainly contribute to the personal income tax.
Whereas, the buoyancy for overall direct taxes increased during the year to 1.16 from 1.07 per cent in 2012-13, according to official figures, it remained less than 1 per cent for corporate tax collections.
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