Who Benefits from the Concessional Corporate Tax Regime in India?

Taking a cue from global corporate income tax (CIT) reduction trends, India offers reduced CIT rates for domestic companies and newly registered manufacturing companies from 20 September 2019. The concessional CIT regime is envisaged to encourage corporate investment, which will generate economic growth and employment. Analysis shows that the objective of attracting new investment in the manufacturing sector is slowly gaining momentum. In aggregate, the author does not find any rise in the annual growth rate of taxable income for domestic companies that opted for the concessional CIT rate vis-à-vis the companies that continued with the standard CIT rates, except in 2022/23. The average annual CIT (gross) collection between 2019/20 and 2023/24 is lower than that between 2015/16 and 2018/19 by 48 basis points of nominal GDP. An assessment of the benefits of the concessional CIT rates across companies would be helpful.