The rate of growth of personal income tax collections during 2013-14 was nearly twice that of the corporate tax collected.The growth in corporate tax collection was so low due to inflation that it lagged behind even the Gross Domestic Product (GDP). According to Finance Ministry data individuals paid 20.51 per cent more income tax in 2013-14 than in the previous financial year.
Whereas the rate of growth in the case of corporate income tax payers remained at 10.76 per cent, failing to keep in tandem with the 12.3 per cent rate of growth of the ‘nominal’ Gross Domestic Product (GDP). Corporate tax collections in 2013-14 took a downturn due to high inflation during most part of the year.
Profits shrank as high inflation made raw materials and inputs costlier. Lower earnings resulted in less taxes paid.
High inflation diminished Profits as it resulted in costlier inputs and raw materials, also as the earnings were low at so it resulted in less taxes.
An individual household is taxed on the salary earned irrespective of the number of dependents as well as expenditure.
High inflation reduces individual’s purchasing power, to the extent that the individual has to curtail their daily budget irrespective of the financial hazards.
An individual has to pay tax on the total earning also to the point receiving already deducted salary.
However such is not the case for restaurants when the tomato or onion prices impact the menu prices, as they can show how inflation has a direct impact on their business and are accordingly taxed, but an individual has no such relief irrespective of inflationary impact
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