Sustaining direct tax growth of 19.5% may be tough in FY24: Report
1 min read . Updated: 20 Jan 2023, 02:37 PM IST
PremiumFinance Minister Nirmala Sitharaman will present the Union Budget on February 1, which will include next year's tax collection projections
Indian government could find it difficult to maintain its current growth momentum in direct taxes in the next fiscal as economic growth is expected to slow, according to a government official reported news agency Reuters.
The Finance Minister Nirmala Sitharaman will present the Union Budget on February 1, which will include next year's tax collection projections.
In the current situation of global recession the expected lower nominal GDP growth in 2023-24 could impact income tax collection, said the source reported news agency Reuters.
Net direct taxes includes personal income tax and the tax levied on corporate earnings. It has seen a record growth in current fiscal year thus topping up the numbers projected in the Budget.
The net direct tax collection was currently growing at 19.5 per cent year on year, amounting to 12.31 trillion rupees ($151.70 billion) in April 2022-January 10, 2023. This is 86.68 per cent of the Budget estimates for current fiscal year.
The expected lower nominal GDP growth in the next fiscal year could impact income tax collections, which include individual as well as corporate taxes, the government official told reporters.
As per first advance estimates, India's nominal GDP is projected to grow at 15.4 per cent this fiscal year. Though after adjusting inflation, real GDP growth is expected to be 7 per cent.
That, in turn, could put pressure on the federal government to reduce its fiscal deficit.
Economists expect real GDP growth to slow down to 6-6.5 per cent next fiscal year and a lower nominal GDP growth on account of declining inflation.