Ramaswami: Subodh Varma 09 Mar 2020 Tax Cuts Faced with a slowing economy, Modi government’s single biggest response was to deeply cut corporate tax rates from 30% to 22%. Announced triumphantly by Finance Minister Nirmala Sitharaman on September 20 last year, this was applauded heartily by the corporate bigwigs and many economists who believe that a freer hand should be given to the “wealth creators” to go about their business. The effect of this cut is now visible. According to latest available information put out by the Controller General of Accounts (CGA), by January 2020, corporate tax collections had dropped below last year’s level by a whopping Rs. 61.44 thousand crore. In other words, industry captains had saved that much – and the government had lost as much. [See chart below] Loss%20Due%20to%20Corporate%20Tax.png Cumulative corporate tax collections by January 2019 were reported as Rs. 454.7 thousand crore while in January 2020, the year to date collections were Rs. 393.2 thousand crore. That’s a difference of roughly Rs. 61 thousand crore. By the time this financial year ends, this neat gift, courtesy Modi government will have ballooned to much more. This has affected the total tax collections of the country very badly too. As per the same CGA report, gross tax revenue in January 2020 was Rs. 15.3 lakh crore compared to Rs. 15.6 lakh crore in January last year. That’s a gap of over Rs. 31 thousand crore. This would have been wiped out if corporate tax had not been cut. Other tax sources that have suffered are customs and excise duties.