PremiumNEW DELHI: The Centre's direct tax receipts shrank for the second consecutive year in FY21, with corporate and personal income tax collections together showing a near 10% contraction from the year ago level, as per official data.
Direct tax receipts fell to Rs9.45 trillion in the just concluded financial year from about Rs10.5 trillion in FY20. This is in line with the projections of a 7.7% contraction in economic growth in FY21.
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However, the silver lining is that provisional FY21 receipts at the end of March showed an improvement over what was projected in the revised estimates at the beginning of February when the Union Budget for FY22 was presented in Parliament. The net direct tax collections represent 104.46% of the revised estimates (RE) of Rs9.05 trillion, said an official statement.
One factor that weighed on the net tax receipts is the amount of refunds which went up in FY21. Refunds amounting to Rs2.61 trillion were issued in FY21 as against refunds worth Rs1.83 trillion issued in FY20, an increase of about 42%, the finance ministry statement said.
For FY21, net corporate tax receipts have shown a steeper contraction compared to taxes on individual income. Corporate tax receipts shrank 18% in FY21 to Rs4.57 trillion compared to a near 1% slippage in the case of personal income tax receipts to Rs4.8 trillion.
Centre’s direct tax receipts had expanded 18% in FY18 and 13.4% in FY19 but contracted 7.6% in FY20, before shrinking 9.95% in FY21. Total receipts of Rs9.45 trillion in FY21 are now lower than the Rs10 trillion seen in FY18.
With the pandemic affecting jobs and corporate profitability, the government is now hoping to mop up Rs1.75 trillion from stake sale in state-run entities in FY22.
Premium Premium The economic survey for 2020-21 had projected that economy will rebound 11% in FY22, after a 7.7% contraction last fiscal, aided by continued normalisation of economic activities. That is, India’s real gross domestic product (GDP) in absolute terms which contracts in FY21 will go past the pre-pandemic year of FY20 in FY22 by a small margin, the survey had said.
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