Net personal income tax collections were growing at a faster 20.7% pace compared to corporate income tax flows, that were up 13.62% over the first eleven months and ten days of this fiscal year. File
| Photo Credit: The Hindu
India’s net direct tax collections growth, that stood at about 17% for this year by early March, is expected to moderate to 15% for the full financial year 2022-23, a top Finance Ministry official told The Hindu.
The government’s net receipts from direct taxes had grown about 49% in 2021-22 to almost ₹14.09 lakh crore. The sharp growth was attributable to the economy’s gradual recovery from the COVID-19 pandemic lockdowns that had hit economic activity in the previous year.
Inflows of direct taxes, that include corporate income tax, personal income tax and the securities transaction tax (STT), had risen almost 20% as of mid-December 2022, but each successive month has recorded a slight slowdown in the growth rate.
By February 10, the growth rate stood at 18.4%, which declined further to 16.8% by March 10, when the total net direct tax kitty stood at ₹13.73 lakh crore. That amount was 96.7% of the Budget estimates for 2022-23 and 83.2% of the revised estimates for direct taxes.
“We expect to close the year with about 15% growth on the net direct tax front,” the official said, adding that part of the reason for the higher growth rates recorded in the earlier part of this year was that due dates for taxpayers to remit their dues had not been relaxed this year as opposed to 2021-22, when the second wave of the pandemic had necessitated some relaxations.
“Moreover, the pace of refunds has shot up this year and some of these refunds may pertain to last year as well. Third, the economy’s growth rate as well as the inflation rate has dropped in the second half of the year, relative to the first half of the year,” the official pointed out
Refunds issued to taxpayers this year amounted to ₹2.95 lakh crore by March 10, almost 60% higher than refunds made over the same period in the preceding year. Net personal income tax collections were growing at a faster 20.7% pace compared to corporate income tax flows, that were up 13.62% over the first eleven months and ten days of this fiscal year.
“The provisional figures of Direct Tax collections up to 10th March, 2023 continue to register steady growth,” the Finance Ministry had said in a statement on March 11. Gross direct tax collections at the time stood at ₹16.68 lakh crore, 22.58% higher than the corresponding period of 2021-22.
“Gross tax revenues have been encouraging this year despite revenue foregone on account of customs and excise duty cuts,” said Rajani Sinha, chief economist at CareEdge Ratings. While she was non-committal about the net direct tax growth prospects, she said there was a possibility of the gross direct tax collections meeting or marginally surpassing the revised target of ₹16.5 lakh crore for the year.
“Upbeat revenue collections could aid in keeping the government’s fiscal deficit target in check,” Ms. Sinha said. CareEdge has projected gross tax collections for 2022-23 at ₹31.1 lakh crore, marginally higher than the Centre’s revised estimate of ₹30.4 lakh crore.