Since the 2019 tax reforms, India’s largest companies have saved ₹3.14 lakh crore due to a reduced corporate tax rate of 22%, in exchange for forgoing certain deductions.
The effective tax rate for the largest companies on the BSE 500 index fell from 30% (before FY19) to 21.2% by FY24, with the top 10% of companies benefiting from even lower rates.
The lower corporate tax rates have led to a decline in the tax-to-GDP ratio, limiting the government's capacity to fund public services and development.
Corporate profits grew at 32.5% from FY20-24, while tax payments grew by only 18.6%, showing a widening gap between profits and taxes paid.
Despite the tax cuts, there’s little evidence to suggest they’ve led to more private investment, job creation, or increased competitiveness.
In addition to the tax rate cuts, tax deductions granted to companies (e.g., for donations, research, or investments in certain regions) resulted in ₹8.22 lakh crore of revenue loss over the past decade.
Critics argue that the government's tax policies lack proper transparency and cost-benefit analysis, with no clear evidence of long-term public benefits from these concessions.
The corporate tax cuts largely benefit large companies, but there’s no solid evidence they have translated into broader economic growth or public welfare.
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