Ever since the advent of the neo-liberal policies in the year 1991, the corporates have been unduly favoured by the successive governments, the present one leaving no stone unturned to please and acquiesce to the demands of the corporate world. With reduced corporate and income taxes, the Central Government incurs revenue loss to the extent of lacs of crores which can be utilised in poverty alleviation programmes. In the year 2020-2021 the revenue foregone by way of incentives and tax exemptions to the corporates was Rs.1,03,286 crores and the figure is ever increasing.
The present regime reduced the effective income tax on corporates to 25.168% (base rate 22%) from 34.94%. Companies have found ways and means to circumvent the tax rates and out of the companies forming part of Nifty500 around 107 companies have paid over 26% of their taxable income as tax, whereas, around 156 companies have paid less than 20% of their income as tax. Notable amongst these companies is RELIANCE INDUSTRIES which managed to pay tax at the rate of 1.68% only, making ‘best use’ of its tax consultants. Such is the commitment of the corporate world to the development of the nation while they have been immensely benefitted by the corporate friendly Central Government.
The benefits reaped from a lesser corporate income tax has not been utilised to replough into their companies which would have generated more employment, whereas, companies have shored up their profit portfolio, ignoring their corporate social responsibility.
Most of the corporates shift the profits made out of the country where they do business and into tax havens in order to pay less tax or no tax. This is the most common method adopted to evade tax. Profit being the only motive of these corporates, it is no wonder that these companies engage in unethical and immoral ways to avoid genuine payments to the government. This being so, the government at the Centre slashes rates of taxes these corporates have to pay in almost every annual budget thereby foregoing lacs of crores of revenue genuinely due to it and these companies pressurize the government to further reduce the taxes that have to be paid by them. The government justifies such reduction in corporate taxes citing the surge in the economy due to investments from these corporates, which do generate employment to a certain extent, whereas, the benefits and largesse from the government to this sector far exceeds their contribution to the development of the economy of our country. This policy has to be reversed in order to reduce the economic inequality widely prevalent in our country.