The Union Government has renamed Personal Income Tax as Non-Corporate Tax, starting from the FY 2025-26, clarifying that the category covers taxes collected from all entities other than companies. The information was shared in the Rajya Sabha by Pankaj Chaudhary, Minister of State for Finance.
The government explained that the new terminology more accurately reflects the nature of tax collections under this category, which includes a wide range of taxpayers apart from companies.
Non-Corporate Tax Collections at Rs 12.35 Lakh Crore in FY25
According to estimates released by the Income Tax Department, Non-Corporate Tax collections reached Rs 12.35 lakh crore in FY 2024-25, marking a growth of 18.23% compared to the previous year.
During the same period, Corporate Tax collections stood at Rs 9.86 lakh crore, recording a growth of 8.31%.
The direct tax system in India broadly categorises tax collections into two heads:
- Corporate Tax, paid by companies
- Non-Corporate Tax, paid by entities other than companies
The Non-Corporate Tax category includes taxes from individuals, Hindu Undivided Families (HUFs), partnership firms, Associations of Persons (AoPs), Bodies of Individuals (BoIs), local authorities, and artificial juridical persons.
Tax Reforms and Policy Measures
The government attributed the growth in tax collections to a combination of policy reforms and administrative measures implemented in recent years.
Corporate tax rates have been rationalised through provisions introduced under the Finance Act. Under the current framework:
- Domestic companies with turnover up to ₹400 crore are taxed at 25 percent.
- Foreign companies are taxed at 35 percent.
- Certain domestic companies can opt for a concessional tax rate of 22 percent if they do not claim exemptions or incentives.
Compliance Measures Boost Tax Collections
The government also highlighted several initiatives aimed at expanding the tax base and improving voluntary compliance among taxpayers.
One such initiative is the NUDGE (Non-intrusive Usage of Data to Guide and Enable) campaign, which uses data analytics to encourage accurate tax reporting.
Other measures contributing to higher collections include:
- Expansion of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) provisions
- Strengthening of third-party financial transaction reporting
- Deployment of the Non-filers Monitoring System (NMS) to identify potential taxpayers
The government has also made PAN quoting mandatory for high-value financial transactions and promoted linking of PAN with Aadhaar to improve transparency in financial reporting.
Stronger Enforcement Against Undisclosed Income
Authorities have also stepped up enforcement actions against undisclosed income and assets 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.
In addition, the government has focused on improving taxpayer services through simplified return filing processes, faster grievance redressal mechanisms, and the promotion of digital transactions.
No Proposal to Change Tax Rates
The finance ministry clarified that there is currently no proposal to increase corporate tax rates or reduce the income tax burden on individuals.
The renaming of Personal Income Tax as Non-Corporate Tax is primarily intended to better reflect the composition of taxpayers contributing to this category within India's direct tax framework.
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