The government has reported a rise in direct tax collections and foreign investment inflows following corporate tax rate reductions, effective from AY 2020-21 (except the pandemic-affected FY 2020-21). Tax collections grew from ₹10.5 lakh crore in FY 2019-20 to a provisional ₹19.6 lakh crore in FY 2023-24. Foreign investment inflows also rose, reaching USD 53,105 million in FY 2023-24 from USD 44,417 million in FY 2019-20. Tax benefits for domestic industries under the Income-tax Act have encouraged investment and economic growth, with key deductions covering infrastructure, start-ups, SEZs, and employment generation. Revenue impacts of these benefits were ₹96,892 crore in FY 2021-22 and a projected ₹1,09,333 crore in FY 2022-23.
Incentives under sections 115BAA and 115BAB of the Income-tax Act have driven new manufacturing companies’ growth from 2,928 in AY 2022-23 to 7,185 in AY 2024-25. Similarly, initiatives for start-ups and employment generation under sections 80IAC and 80JJAA have increased the number of beneficiaries. These measures aim to attract international corporations like Apple, Google, and Tesla, creating a competitive business environment, boosting investment, and contributing to India’s vision of becoming a $5 trillion economy.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
LOK SABHA
STARRED QUESTION NO. *18
TO BE ANSWERED ON MONDAY, FEBRUARY 3, 2025/MAGHA 14, 1946 (SAKA)
TAX COLLECTION AFTER REDUCTION IN CORPORATE TAX RATES
*18. Shri Bhartruhari Mahtab
Shri Balabhadra Majhi:
Will the Minister of FINANCE be pleased to state:
(a) whether there has been an overall increase in tax collection and foreign investment inflows after reduction in corporate tax rates, if so, the details thereof, year-wise;
(b) the industry-wise details of tax benefits extended and their impact on economic growth;
(c) the specific incentives being considered by the Government to attract more international corporations like Apple, Google and Tesla to establish manufacturing unit in the country; and
(d) the manner in which these initiatives impact tax revenue and economic growth to achieve the India’s vision of becoming $5 trillion economy?
ANSWER
THE FINANCE MINISTER
(SMT. NIRMALA SITHARAMAN)
(a) to (d): A statement is laid on the Table of the House.
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Statement referred to in reply to parts (a) to (d) in respect of LOK SABHA STARRED QUESTION NO. *18 for reply on 03.02.2025 regarding Tax collection after reduction in corporate tax rates asked by Shri Bhartruhari Mahtab & Shri Balabhadra Majhi.
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)
| Financial Year | Net Direct Tax Collection |
| 2019-20 | 10,50,681 |
| 2020-21 | 9,47,176# |
| 2021-22 | 14,12,422 |
| 2022-23 | 16,63,686 |
| 2023-24 | 19,60,166* |
| 2024-25 (up to 31.12.2024) | 16,14,572* |
Source: Pr. CCA (CBDT)
#Covid affected Year
*Provisional
The Net Foreign Investment Inflows have increased from USD 44,417 (in Million) in FY 2019-20 to USD 53,105 (in Million) in FY 2023-24 [As per data available on the website of Reserve Bank of India (https://data.rbi.org.in/)].
(b) The domestic companies are provided certain tax benefits under different provisions of the Income-tax Act in the Old tax regime which interalia are as under:
| S. No | Nature of tax benefit |
| 1. | Deduction of export profits to units/undertakings located in SEZs |
| 2. | Deduction/weighted deduction for expenditure on scientific research |
| 3. | Deduction for a specified business with fulfillment of certain conditions related to Petroleum & Natural Gas |
| 4. | Deduction of profits of undertakings engaged in development of infrastructure facilities, generation, transmission and distribution of power and undertakings engaged in revival of power plant or providing telecommunication services |
| 5. | Deduction of profits of industrial undertakings derived from the following-
|
| 6. | Deduction for Offshore Banking Units [OBUs] and International Financial Services Centre [IFSC] |
| 7. | Deduction for undertakings setup in North Eastern states and Sikkim |
| 8. | Deduction for employment of new workmen |
| 9. | Deduction for eligible start-ups |
| 10. | Deduction for Dividend received |
The total revenue impact on account of tax benefits extended to companies was Rs. 96,892.39 Crores and Rs. 1,09,333.38 Crores (projected) in FY 2021-22 and FY 2022-23 respectively (Source: Receipt Budget 2024-25). The above tax benefits have the impact of making the corporates competitive and encouraging investment and therefore economic growth.
(c) The specific incentives to be provided in the Income-tax Act as considered appropriate form part of the Finance Bill.
(d) 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 startups 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 initiatives taken have led to generation of employment, increase in tax revenue and overall economic growth.
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