The government has renamed Personal Income Tax as Non-Corporate Tax (NCT) from FY 2025–26, as the category includes taxes collected from entities other than companies, Minister of State for Finance Pankaj Chaudhary informed the Rajya Sabha.
According to estimates by the Income Tax Department, Non-Corporate Tax collections stood at Rs. 12.35 lakh crore in FY 2024–25, registering a growth of 18.23 percent, while Corporate Tax collections were Rs 9.86 lakh crore, growing 8.31 percent during the same period.
The minister said the direct tax system broadly categorises collections into Corporate Tax and Non-Corporate Tax, with the latter covering individuals, Hindu Undivided Families (HUFs), firms, associations of persons (AoPs), bodies of individuals (BoIs), local authorities and artificial juridical persons.
Policy measures and Tax reforms Behind Growth
Explaining the variation in growth rates between the two categories, the government cited several legislative, administrative and enforcement measures.
Corporate tax rates have been rationalised through successive Finance Act provisions, including a 25 percent tax rate for domestic companies with turnover up to Rs 400 crore for FY 2023–24, and 35 per cent for foreign companies.
Additionally, certain domestic companies have been given the option to pay tax at a concessional rate of 22 per cent if they do not avail of exemptions or incentives.
The government also attributed the rise in non-corporate tax collections to efforts to expand the tax base and improve compliance. These include the NUDGE (Non-intrusive Usage of Data to Guide and Enable) taxpayer campaigns, expansion of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) provisions, and strengthened third-party financial transaction reporting.
Compliance Drives Increase Non-Corporate Tax Collection
Other initiatives include the Non-filers Monitoring System (NMS) to identify potential taxpayers, mandatory quoting of PAN and linking of PAN with Aadhaar, and action against black money under laws such as the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 and the Benami Transactions (Prohibition) Amendment Act, 2016.
The government has also promoted voluntary tax compliance through improved taxpayer services, faster grievance redressal, easier filing of returns and promotion of digital transactions.
Meanwhile, the minister clarified that there is currently no proposal to increase corporate tax rates or reduce the income tax burden on individual taxpayers.
Source from: https://knnindia.co.in/news/newsdetails/sectors/government-renames-personal-income-tax-as-non-corporate-tax-from-fy26
