The Controller General of Accounts has published the accounts information for the financial year 2020-21 on Monday 31st May 2021. The corporation tax (CIT) collections for the financial year 2020-21 has significantly decreased by 17.90% compared to the financial year 2019-20. For the first time, the personal income tax (PIT) collections are higher than the corporation tax collections.
As per the accounts published by the government, the corporation tax collection for the year 2020-21 were Rs.4.57 lakh crore, and personal income tax collections were Rs.4.69 lakh crore. The PIT collection has significantly surpassed the CIT collections by Rs.12,046 crore.
The corporation tax, also called company tax or corporate tax, includes tax collected from foreign or domestic companies from their business. In comparison, personal tax is a tax collected from individual taxpayers (self-employed or full-time employees) or HUFs.
The primary reasons behind the fall in corporate tax collections are reduction in the tax rates since the past few years and contraction in GDP due to pandemic. The implementation of lockdown during the COVID pandemic has adversely impacted service sectors, mainly entertainment, civil aviation and tourism. These sectors are either shut or struggling at reduced capacity. Further, the effective tax rates for corporates was brought down to 25 per cent, nearly 10 basis points, for certain existing domestic companies and 17 per cent for new manufacturing companies.
The personal tax collections may have increased due to better reporting of incomes. However, the PIT collections have also marginally declined by 2.3 per cent to collections in the financial year 2019-20. The figures of personal tax include collections from Securities Transaction Tax (STT).
The total net tax revenue collections for the last fiscal year was Rs.9.26 lakh crore, which is 10.68 per cent less than the collections made in the financial year 2019-20 (Rs.10.37 lakh crore).
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