What is Corporate Tax and Why government of India Reduce its Taxes #UPSC

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Corporate tax is also called corporation tax or company tax which is a direct tax imposed on the jurisdiction on the income or capital of corporation.
Now the question is, from where does Government of India generate Income?
Corporate tax is the biggest source of income to Government of India.
According to budget of 2019, 20% came from borrowing and liabilities, 16% from customs ,and others from non tax revenue, GST and other taxes.
Corporate tax is a big source of revenue for the Government Of India.

Government has slashed basic Corporate tax rate to 22% from 30% while new manufacturing companies or if someone wants to start a manufacturing company in India then its rate has also been cut down to 15% from 25%.
Government will face a loss of 1 lakh 45 thousand crore Rupee. RBI(Rural bank Of India) surplus will help to cover this loss.

Effective tax rate inclusive of all cess and surcharges is now 25.17% for domestic companies and 17% for new manufacturing companies. Corporate Tax rate is levied on their net income or profit of that company which is beneficial for companies.

⇥Why we are doing this?
We are doing this to boost up Make in India.

 It was a hard decision for the Government Of India.

Government of India found that other countries are investing in those Countries where Corporate Tax rates are less that's why India has also taken this step to reduce Corporate Tax. There is a possibility of coming various companies in India to invest here. As a result, major investment in India will be there in future and companies will established, which will generate employment in huge amount.

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