The net direct tax collection increased by 13.48 percent year on year in FY25 to Rs 22,26,375 crore, owing to an overall increase in collections following the reduction of corporate tax rates effective from Assessment year (AY) 2020-21, the Parliament was informed on Monday.
In a written reply to the Lok Sabha, Minister of State for Finance Pankaj Chaudhary stated that net direct tax collection has grown steadily since FY 2021-22.
Key Highlights
- Finance Minister confirms direct tax collections grew steadily since AY 2020‑21 following corporate tax rate cuts.
- Net direct tax collections significantly exceeded ₹19.60 lakh crore in FY 2023‑24 after corporate tax reductions.
The total revenue impact of tax benefits extended to businesses was Rs 88,109.27 crore and Rs 98,999.57 crore (projected) in FY 2022-23 and FY 2023-24, respectively.
"The above tax benefits have the effect of making corporations competitive and encouraging investment and, thus, economic growth," the minister stated.
To encourage startups, initiatives have resulted in a rise in the number of startups claiming a deduction under Section 80IAC of the Income Tax Act, from 328 in AY 2022-23 to 877 in AY 2024-25.
Furthermore, the number of companies covered by Section 80JJAA in terms of hiring new employees has increased from 2,838 in fiscal year 2022-23 to 3,644 in fiscal year 2024-25, according to Chaudhary.
"The specific incentives are provided in the Income Tax Act via the Finance Bill. He noted that the initiatives taken have resulted in job creation, increased tax revenue, and overall economic growth.
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Sections 115BAA and 115BAB of the Income Tax Act were amended in 2019 to create a globally competitive business environment for domestic companies, attract new investment, and create job opportunities.
According to the minister, Section 115BAB has resulted in a significant increase in the number of new manufacturing companies, from 2,928 in AY 2022-23 to 7,185 in AY 2024-25.
India's total gross direct tax collections (before adjusting for refunds) have more than doubled over the last five years, reflecting the country's strong economic growth and improved tax compliance, which has been aided by the introduction of new digital technology.
