Corporate tax mop-up to rise, says Rangarajan

HYDERABAD, NOV 13: The corporate tax in the country was expected to grow to Rs 29,750 crore during the current financial year, an increas...

HYDERABAD, NOV 13: The corporate tax in the country was expected to grow to Rs 29,750 crore during the current financial year, an increase of Rs 2,700 crore over the previous year, Andhra Pradesh governor Dr C Rangarajan said today.

Inaugurating the state-level conference on Corporate Taxation’ organised by Andhra Pradesh Tax Bar Association here, Dr Rangarajan, who is former Reserve Bank of India governor, said although the ratio of corporate tax to gross domestic product (GDP) was below two per cent, along with the other income taxes it has shown a rising trend.

The tax revenue has grown from Rs 110 crore in 1960-61 to Rs 370 crore in 1970-71 to Rs 1,310 crore in 1980-81, Rs 5,335 crore in 1990-91 to Rs 27,050 crore in 1998-99, he said.

Corporate tax was an important source of revenue to the Central Government, Rangarajan said adding ratio of corporation tax to GDP reached a peak of 1.7 per cent in 1997-98 while that of the personal income tax went up to 1.6 per cent. Emphasising the importance of asound fiscal system for sustained economic growth, he said a study had indicated that the sustainable level of the combined fiscal deficit should be between five to six per cent of the GDP.