Corporate tax rates saw sharp reductions in the last two years. While the corporate tax rates have indeed come down for most companies, the rates are skewed with uneven distribution among firms.
Steep fall
In September 2019, India’s statutory corporate tax rate was reduced to 22%, lower than the global average of 23.79%. Graph traces the corporate tax rates over the years in India.
How has the statutory corporate tax rate in India come in the last two years
Budget 2020-21 | Effective tax rates Chart 1 - Corporate tax
More profit, more tax
Higher effective tax rates were paid by firms having a larger share in overall profits. Firms with a tax rate between 25%-33% had 52.1% share in total profits. Graph plots the effective tax rates of % share of companies (blue bar, left-axis) against their % share in profits (red line, right-axis).
Share in profits
Budget 2020-21 | Effective tax rates Chart 2 - Effective tax rate and share of profits
Skewed towards richest
While the tax rate was highest for firms with profit before taxes between ₹100 to ₹500 crore, companies earning the highest profits (> ₹500 cr.) had the least effective tax rate. Graph plots profits before taxes of number of companies (blue bar, left axis) against the effective tax rate of companies (red line, right axis).
Profit and effective tax rates
Budget 2020-21 | Effective tax rates Chart 3 - Profits and effective tax rates
Global snapshot
In 2019, UAE had the highest corporate tax rate. Among BRICS, only Russia had a lower tax rate than India. Graph plots tax rates of various nations in 2019.
Corporate tax rates globally
Budget 2020-21 | Effective tax rates Chart 4 - Global corporate tax rates
