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Digital companies overtake pharma, become top taxpayers in Gujarat

| Updated: July 15, 2021 22:11

Though Gujarat and its booming pharma companies made a kill, literally in the Covid times with manufacturing and selling of several medicines and injections including Remdesivir, Fabiflu, Virafin and others, they have lost the top slot.

For the first time ever, Gujarat based digital companies have overtaken the pharma sector when it comes to paying income tax.

Principal Chief Commissioner of Income-tax (PrCCIT), Gujarat, Ravindra Kumar told Vibes of India that though it seems it is pharma, it has been digital companies based in Gujarat, which have overall paid more income tax. “I am not talking about individuals but companies”, he said.

Principal Chief Commissioner of Income-tax (PrCCIT), Gujarat,
Ravindra Kumar

“Vitamin production and a few specific drug manufacturing companies have paid the high-income tax, but overall pharma has suffered. Elective surgeries like dentistry, orthopaedic surgeons, or even cardiologists have also had a slowdown. Till now, the pharma sector was the largest tax-paying sector of Gujarat but this year, digital companies have taken over.

Gujarat enjoyed being the pharma hub of India. Vibes of India had recently reported how Hyderabad has taken over Gujarat in the pharma sector recently.


 Gujarat has commanded over 20% of India’s pharmaceutical turnover and exports. There are currently over 3,500 drug manufacturing units in Gujarat and the state houses some of the established companies such as Zydus Cadila, Torrent Pharma, Claris, Intas Pharma, Alembic and many more.  Zydus Cadila Healthcare was one of the first companies to get the approval for ZyCov-D dose. Even Torrent pharmaceuticals fared well due to the production of drugs for Covid medication. But due to the pandemic digital companies achieved an ‘unnatural boost’.

With the pandemic led boom in the pharma industry of Gujarat it might seem they are the biggest taxpayers in the past one and a half years; but Principal Chief Commissioner of Income Tax (PrCCIT) Gujarat, Ravindra Kumar—a 1986 batch IRS officer told VoI that it is not so anymore. For over 25 years, pharma companies ranked the first but for the first time, digital companies have surpassed them.

Principal Chief Commissioner of Income-tax (PrCCIT), Gujarat, Ravindra Kumar

 “Software, digital and technology-related companies based in Gujarat are the top taxpayers. App creators and OTT platforms performed well. Data usage per individual has increased 50 times, he said adding that TCS(Tata Consultancy Services) had also fared impressively, he said.

Big Boss is watching you!’

To commemorate the 75th Anniversary of India’s Independence and 161 years of Income Tax; the government is celebrating Azadi Ka Amrit Mahotsav. As a part of the celebration, the Directorate General of Administration and Tax Payer Services has launched the department’s first soundproof communication centre ‘Samvaad’. CBDT chairman Jagannath Mohapatra inaugurated the centre through a live streaming event on July 15, 1 pm.

“People’s confusion regarding tax will be resolved easily. Also, we as a department have become more efficient due to technology. Earlier tax evaders were getting away as we did not have data analysis. Our data-keeping system was conventional, and we also had a shortage of resources. Even if we had data, it was humanly impossible for us to process it. Now, the big boss is watching you so, you better pay your tax.” He emphasized the voluntary compliance of tax returns as they do not want to enforce anything on taxpayers.

Tax collection on an upward trend

Tax collection from Gujarat has reduced in the past one and half years, Kumar confessed. “Many people who were contributors to the economy lost their lives due to Covid and it is reflected in the tax collection. Tax collection took a big dip in the year 2020-21 but our data shows that now, we are on an upward trend compared to 2020-21.”

“When we had joined service in 1986, total tax collection of the country was 10,000 crores and in 2019-20 we collected 14 lakh crores. No company gives this sort of Compound Annual Growth Rate (CAGR)” Kumar added.

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