Achieving Budget estimates for Corporate Tax, Union Excise Duty poses tough challenge
Meeting Budget Estimates (BE) related to collection of Corporate Tax and Union Excise Duty would be a tough task, latest trends show. Revised number for both the levies will be provided in the Union Budget for Fiscal Year 2025-26 to be presented on February 1.
Data from Income Tax Department shows actual growth rate in net Corporate Tax (CT) has been around 8.6 per cent as against targeted growth rate of 10.5 per cent (FY25’s Budget Estimate of Rs. 10.20 lakh crore as against FY 24’s Revised Estimate of Rs. 9.23 lakh crore). Though the department has not given any specific reason for lower actual growth than required growth rate, it appears that slowdown in urban demand, lower Government spending on account of model code of conduct in April-June quarter and monsoon-related disruptions in July-September quarter impacted corporate profitability which, in turn, had some effect on CT.
Meanwhile, rating and economic research agency ICRA expects sequential revenue growth for India Inc in Q3 (October-March) FY2025, led by improved rural demand and uptick in Government spending and additionally supported by the festive season. However, headwinds such as uneven urban demand and evolving global uncertainties could weigh on growth in H2 (October-March) FY2025. “ICRA expects the operating profit margin (OPM) for India Inc to improve in the coming quarters,” the agency said in recent report. Still, considering the surging required rate in remaining months of FY 25, it would be challenging to achieve budget estimates of Rs. 10.20 lakh crore for CT in current fiscal year.
