An autonomous research institute under the Ministry of Finance


Estimation of Corporate Tax from the Manufacturing Sector of the Indian Economy

Publication date

Jan, 2004


Report submitted to the Ministry of Finance


A. L. Nagar, Sanjay Kumar, Rajorshi Sen Gupta


Disaggregation of corporate tax (CT) according to the source of accrual may be useful in improving the precision of forecasts. In this paper, CT from the manufacturing sector in terms of level of profits (actual/estimated), contribution of the manufacturing sector to GDP and the upper bracket statutory corporate tax rate are estimated. The study shows that a 1 % increase in profits would lead to 0.34% increase in CT, a 1% increase in the contribution of manufacturing to GDP would result in 0.58% increase in CT and a 1% decrease in statutory tax rate has a positive effect on CT of the order of 0.44%.

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