Questioning the corporate tax cut announced by the Centre in 2019, the Congress party today said the revenue loss on account of the tax cuts could be to the tune of ₹1 lakh crore in FY22. Congress also urged the Centre to announce tax breaks for the middle and lower income classes.
Quoting the recent report of the Estimates Committee of the Parliament, which brought to the fore the fact that corporate tax cut has led to revenue loss worth ₹1,84,000 crore in FY20 and FY21, the party today asked what is preventing the government to announce similar relief to the lower and middle income classes, which are reeling under a peak tax rate of 30%.
Addressing media persons, Congress spokesperson Gourav Vallabh today said, "Middle and lower income groups also need tax cuts. The loss to the exchequer in FY20 and FY21 due to the corporate tax cuts was worth ₹1,84,000 crore. Corporate tax rate was reduced from 30% to 22%. Tax rate on new manufacturing companies was lowered to 15%. The tax rates were reduced at the time when FM had admitted that Centre did not have money to pay GST compensation to the states."
The party claimed that even though the government maintained that the reduction in the corporate taxes will boost the domestic economy, the benefits have been utilised by the companies towards debt servicing and building reserves.
"We have got five specific questions to the government. Is corporate tax cut a priority over schemes like MNREGA? The amount foregone would have enhanced the MNREGA budget by over two times. Peak tax rate of the mid income families is 30% versus the corporate tax rate of 22%. Why are the rate cuts limited only to the corporate sector? Why this discrimination?" Vallabh said.
"In FY21, the corporate tax collection was ₹4,57,719 crore, while income tax collection was ₹4,87,144 crore. Why is the common man being made to pay more taxes than the corporate sector," Vallabh said, questioning the timing of the tax cuts as they were done just days ahead of PM Modi's visit to the Howdy Modi event in the US.