Union Budget 2021 | Firms with the highest profits paid the least effective tax in FY2019

In FY2019, the corporate tax rate in India was 25.71%

February 02, 2021 07:26 pm | Updated 08:28 pm IST

Union Finance Minister Nirmala Sitharaman addresses the post-Budget press conference, in New Delhi on February 1, 2021.

Union Finance Minister Nirmala Sitharaman addresses the post-Budget press conference, in New Delhi on February 1, 2021.

Corporate tax rates saw sharp reductions in 2018 and 2019. After remaining constant at 34.61% between FY2015 and FY2017, it fell to 30% in FY2018. The rate was cut again in FY2019 to 25.71%. However, the rates are skewed, with uneven distribution among companies.

The effective tax rate of the entire base of companies reporting profits was 27.81 per cent for financial year 2018-19 as against the rate of 29.49 per cent reported in the financial year 2017-18.

Steep fall

India's corporate tax rate has fluctuated over the years, with FY18 and FY19 recording steep drops. In FY19, the corporate tax rate in India was 25.71%.

image/svg+xml
 

More profit, more tax

Higher effective tax rates were paid by firms having a larger share in profits. Firms with an effective tax rate between 25% and 33% had 58.5% share in total profits.

image/svg+xml
 

Skewed towards the richest

While the tax rate was highest for firms with profits between Rs. 100 and Rs. 500 crore, firms with the highest profits (more than Rs. 500 crore) had the least effective tax rate.

image/svg+xml
 

Global snapshot

In 2019, India's corporate tax rate was among the lowest in the world.

image/svg+xml

Also read: Union Budget 2021 | While "health and wellbeing" budget records 137% rise, health outlay declines 9%

Source: Budget documents | *Figures for FY2021-22 are Budget estimates; FY2020-21 are revised estimates.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.