new Delhi. The actual gross direct tax collection fell 4.92 percent to Rs 12.33 lakh crore in FY 2019-20. The main reason for this is the increase in the rate of deduction of corporate tax, standard deduction and exemption of personal income tax. The Income Tax Department on Sunday said that if personal income tax and corporate income tax were charged at the old rates, then during 2019-20, gross direct tax collection could have increased by eight per cent to Rs 14.01 lakh crore. The gross direct tax collection stood at Rs 12,97,674 crore in FY 2018-19.
"The net direct tax collection in 2019-20 was lower than in 2018-19," the Central Board of Direct Taxes (CBDT) said in a statement. But it was anticipated. The main reason for this is the historical tax reform during 2019-20, due to which more refunds were issued. The actual corporate tax collection stood at Rs 6.78 lakh crore and personal income tax collection was Rs 5.55 lakh crore in FY 2019-20. Thus the actual tax collection for 2019-20 was Rs 12,33,720 crore. The reduction in corporate tax rate during the financial year reduced tax collection by Rs 1.45 lakh crore.
At the same time, raising the personal income tax limit to Rs five lakh and raising the standard deduction limit to Rs 50,000 also reduced the tax collection of Rs 23,200 crore. If this had not happened, corporate tax collection would have been Rs 8.23 lakh crore and personal tax collection Rs 5.78 lakh crore in 2019-20. Thus the gross direct tax collection would have been Rs 14.01 lakh crore, which would have been 8.03 per cent higher than in 2018-19.
In September last year, the government lowered the tax rate to 22 percent for all domestic companies using no tax rebate. Such companies were also given relief from payment of minimum alternative tax (MAT). At the same time, the tax rate was reduced to 15 percent for new domestic manufacturing companies which did not avail any special tax exemption. They were exempted from brother mats. Whereas, the rate of MAT was also reduced from 18.5 percent to 15 percent for companies paying tax by availing tax exemptions under MAT. Similarly, the exemption limit for personal income tax has been increased from Rs five lakh and standard deduction from Rs 40,000 to Rs 50,000.
This post was published on June 7, 2020 7:34 pm
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