New Delhi: Effective Tax Rate Reduction (ETR), low interest rate regime and decrease in pandemic in the center of the Covid-19 pandemic appeared to have become a blessing in disguise for India Inc., a report by the state of the state of India (SBI) said on Monday.
ETR is a percentage of income paid by someone individual or corporation in taxes.
As a company, it is a level paid on pre-tax profit.
For around 4,000 registered entities, ETR decreased from 35 percent on FY20 to 26 percent at FY21.
However, the actual tax paid increased by more than Rs 50,000 Crore to Rs 1.90 lakh Crore at FY21 because of the RS 1.40 Crore collected last year.
The decline in sector-wise in Etrtro was significantly reduced – starting from 1 percent to 24 percent – for many sectors including engineering, realty, car and trade.
For realty, ETR decreased from 50 percent at FY20 to 26 percent at FY21.
The car sector reported a 3 percent reduction in ETR – from 36 percent in FY20 from 33 percent next year.
Furthermore, the trade sector reported a reduction of 13 percent in ETR while FMCG and packaging each reported a reduction of 1 percent respectively, SBI report said.
However, the reduction of the best corporate tax collection in tax rates, however, leads to the best corporate tax revenue collection in almost three decades in FY22.
In accordance with SBI analysis, tax deductions on the FY20 contributed 19 percent to the top sector top sector during pandemic with cement, tires and consumer endurance showed a significant contribution – even more than 50 percent.
“Interestingly, with a strong direct tax collection, especially corporate tax, in Q1 FY22 we believe that the gap between GVA and GDP will be large because GDP growth in Q1 FY22 will be supported by taxes,” the report said.
Low interest rates The next report noted that the extended period of low interest rates have also helped the company in massive deleveraging and contributed to an average of 5 percent to the entire Top Line sector with durable power, health and cement services that benefited the most.
The report also shows that the old period of low interest rates has also helped companies in large deleveraging and contributed to an average of 5 percent to the overall top line.
Sectors such as consumer durability, health care and cement benefit most.
In addition, the cost of employees has been cut by an average of 3 percent at FY21.
The maximum cutting in the cost of employees has existed in the sector faced by consumers.
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