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Lessons from a tax cut

Fears of a huge revenue loss from the 2019 reduction in corporation tax rates were exaggerated

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Illustration: Binay Sinha

A K Bhattacharya
Almost three years ago, the Modi government had introduced a new corporation tax structure. On Friday, September 20, 2019, months before the Covid pandemic took a heavy toll on the health system and the economy, Finance Minister Nirmala Sitharaman announced a major cut in corporation tax rates to revive growth that had begun to show early signs of a slowdown.

The new tax rate for all Indian companies, not availing themselves of the various exemptions and incentives like tax holidays, was brought down to 25 per cent (inclusive of a 10 per cent surcharge and a 4 per cent cess). In
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