Aided by better compliance, lower refunds and a gradual revival of economic activities, the Centre collected Rs 13.63 trillion as direct taxes by March 16 in 2021-22, up Rs 1.13 trillion or 9% over the revised estimate (RE) for the year. With the robust mop-up, the government could appropriate a sum marginally higher than it could have got from Life Insurance Corporation’s initial public offering, which has now been postponed to the next fiscal year.
The higher-than-expected tax revenue in FY22 also makes the relevant Budget estimate (BE) for FY23 a gross under-estimate. With two weeks still to go, the direct tax receipts, net of refunds, in the current financial year could approximate Rs 14 trillion, which is at striking distance from the FY23 BE of Rs 14.2 trillion.
With net additional revenue of Rs 20,000 crore expected as goods and service tax (GST) receipts and a tidy sum to come in as additional customs revenue given the surge in import value, the overall net tax revenue in FY22 could be higher than the respective RE of Rs 17.6 trillion by a neat Rs 1 trillion.
The Budget for FY23 assumes nominal GDP growth of 11.1% for the year. Independent estimates say the growth could be a bit higher due to elevated inflation, even though the real GDP expansion might turn out to be less than 8-8.5% forecast by the Economic Survey. That means the buoyancy required to achieve the targetted net tax receipts (BE) will be far lower than 0.9 estimated in the Budget.
“The record achievement in direct tax collections in FY22 is on account of reforms over a period of time, greater compliance and awareness among taxpayers to pay taxes in time. We also expect tax collections next financial year to be robust and surpass the target,” Central Board of Direct Taxes chairman JB Mohapatra told FE.
Advance direct tax collections from companies, LLPs and individuals rose by over 30% on year to about Rs 1.8 trillion in Q4FY22, even as a favouarble base effect waned. Cumulative advance tax collections till March quarter of FY22 stood at Rs 6.62 trillion (as on March 16), an increase of about 41% upon FY21 and 51% over FY20, an official said.
Till March 16 of the current financial year, direct tax collections (post refunds) stood at Rs 13.63 trillion, up about 48% on year, up 43% over the same period in FY20 and 35% over the corresponding period in FY19.
Gross direct tax collection (before refunds) stood at Rs 15.5 trillion as on March 16, showing 38% growth on year and 37% compared with the same period in FY20.
Gross collections till March 16 includeed corporation tax at Rs 8.37 trillion (up 37% on year) and personal income tax including security transaction tax (STT) at Rs 7.1 trillion (up 40%). Among minor head wise collections as on March 16, tax deducted at source stood at Rs 6.86 trillion (38%); self-assessment tax of Rs 1.34 trillion (35%); regular assessment tax of Rs 55,249 crore (47%); STT at Rs 23,190 crore (37%) and equalisation levy at Rs 3,444 crore (94%).
Refunds amounting to Rs 1.87 trillion have been issued in the current financial year so far.
