The Income Tax Department said that the simplified tax regime with low rates has yielded results, and the tax collected on income of companies increased by 34 per cent in the first four months of the current fiscal that began in April. The tax department posted in April-July on corporate tax collection growth in an attempt to counter the criticism of the 2019 reduction in tax rates for companies that were said to have hurt the Centre's revenue collections, impacting its spending on social welfare schemes. The corporate tax collections during FY 2022 -- 23 to 31 July, 2022 register a solid growth of 34 per cent over the corporate tax collections in the period FY 2021 -- 22, it said, without giving an absolute number for the collection. Tax collections are one of the indicators of economic activity as higher income of companies suggests demand growth and wealth creation. The corporate tax collection in 2021 -- 22 was higher by over 9 per cent when compared to the pre-COVID 2018 -- 19 collections. The growth continues in current fiscal but also for the impact of the COVID 19 pandemic during FY 2020 - 21, when corporate tax collections took a temporary hit, it said. The simplified tax regime with low rates and no exemptions has lived up to its promise. In September 2019, the government gave companies the option to switch to a lower basic rate of 22 per cent from 30 per cent while foregoing all exemptions. In the year 2019 -- 20 corporate tax collections fell by 16 per cent to 5.57 lakh crore. The decline was about 1 lakh crore and not 1.45 lakh crore, as was feared at the time. Tax collections in 2020 -- 21 were hit due to the pandemic. While the ruling BJP and Prime Minister Narendra Modi have launched a major offensive against freebies such as free electricity and water that they say lead to bankruptcy of a state, the Aam Aadmi Party AAP has accused the ruling dispensation of giving doles to corporate in form of lower taxes and waiving off their loans. The debate on freebies comes before states like Gujarat go to polls. AAP wants to challenge the ruling BJP in the state with its Delhi model of development where consumption of electricity and water is up to a certain level free of charge. The BJP seems to be against electoral promises that don't consider the fiscal health of a state.