Companies may foot less of the tax bill for some time yet.

The corporate share of net direct tax collections has been lower in 2024-25 than in previous years.

The corporate segment accounted for 45.6 per cent of total net direct tax collections as of March 16, compared to 48.1 per cent on the same date in 2023-24 (FY24).

The trend in corporate tax collections has been declining relative to overall tax collections. The share peaked at 67 per cent in 2010-11 but dropped to 46.5 per cent in FY24, according to Department of Revenue figures.

This is the lowest in 26 years. The previous low was 41.5 per cent in 1997-98, coinciding with sizeable tax reforms and a move towards lower rates.

It’s a direct function of corporate performance,” said Bank of Baroda Chief Economist Madan Sabnavis.

The tax base has also been widening, bringing more individuals into the tax net, which has contributed to a larger share of personal income taxes.

This, in turn, has reduced the corporate share of direct taxes, even as companies have faced challenging times.

The outlook could also be affected by uncertainty around trade wars, which may negatively impact certain sectors, affecting their profitability and tax contributions, he said.

Overall corporate tax collection grew by 7.1 per cent year-on-year compared to 17.5 per cent for non-corporate entities, while overall net direct tax collection grew by 13.1 per cent.

Corporate advance tax collections grew by 12.54 per cent compared to 20.47 per cent for non-corporate entities.

Sumit Singhania, a partner at Deloitte India, said there has been a marked shift in the direct tax mix in recent years in favour of personal income-tax (I-T) collections relative to corporate tax collections.

“For the most part, this shift can be attributed to two key factors — first, the staggered reduction in the headline corporate tax rate over the past four to five years from a high of 36 per cent to a median of 25 per cent (in the case of manufacturing companies, the rate has dropped to 17 per cent).

“Second, the individual tax base has expanded significantly as more people file tax returns, driven by simplified compliance procedures that encourage voluntary filings,” he said in an emailed response.

The outlook suggests a continuation of recent trends, according to Singhania.

“If one looks ahead to the next five to seven years, this trend is likely to persist and become more pronounced as economic reforms take deeper root and their benefits extend further into Tier-II, -III, and -IV cities.

“Strong growth in personal tax collections is expected to continue, further influencing the overall mix of direct tax revenues.

“Meanwhile, with the proposed reform of I-T legislation, corporate tax compliance should become more seamless, supporting absolute growth in corporate tax collections as well,” he said.