Thursday, 10 Oct, 2024
By: Yash Gupte
In the ten years leading up to 2022–2023, gross direct tax receipts climbed by 173 percent, reaching approximately Rs 19.68 trillion. Image Source: IANS
The Net Direct Tax collection of Rs 3,79,760 crore (as on June 17, 2023) include Corporation Tax (CIT) at Rs 1,56,949 crore (net of refund) and Personal Income Tax (PIT) including Securities Transaction Tax(STT) at Rs 2,22,196 crore (net of refund).
According to the data released by the Ministry of Finance, the central government’s direct tax collection for the financial year 2023-24 increased by 11 percent to Rs 3,79,760 crore as compared to Rs 3,41,568 crore in the corresponding period of the preceding fiscal year 2022-23. The Net Direct Tax collection of Rs 3,79,760 crore (as on June 17, 2023) include Corporation Tax (CIT) at Rs 1,56,949 crore (net of refund) and Personal Income Tax (PIT) including Securities Transaction Tax(STT) at Rs 2,22,196 crore (net of refund).
Before accounting for refunds, the Gross Direct Tax Collection for the FY 2023–24 is Rs. 4,19,338 crore as opposed to Rs. 3,71,982 crore for the same period the previous financial year, representing an increase of 12.73 percent over collections for FY 2022–23. Corporation tax (CIT) at Rs. 1,87,311 crore and personal income tax (PIT) including securities transaction tax (STT) at Rs. 2,31,391 crore are included in the gross collection of Rs. 4,19,338 crore. Advance tax, tax deducted at source, self-assessment tax, regular assessment tax, and tax under other minor heads total a total of Rs. 1,16,776 crore, Rs. 2,71,849 crore, Rs. 18,128 crore, Rs. 9,977 crore, and Rs. 2,607 crore, respectively, for minor head collections.
In the ten years leading up to 2022–2023, gross direct tax receipts climbed by 173 percent, reaching approximately Rs 19.68 trillion. In the prior ten years, the growth rate was approximately 431.92 percent. From Rs 1.05 trillion in 2003–2004 to Rs 5.58 trillion in 2012–2013, direct tax revenue had increased by that point. The base, however, was small at the time. From 5.62 percent of GDP in 2013–14 to 5.97 percent in 2021–22, the direct tax share has risen. According to the data, the cost of collecting declined from 0.57 percent of the total collection in FY14 to 0.53 percent in FY22.
Considering the record increase in the direct tax buoyancy, India Tracker takes a look at the direct tax collection in FY2022-23 and also some of the major statistics released by the Ministry of Finance and Central Board of Direct Taxes.
As per the Ministry, Net Direct Tax Collections have increased by 121.18 percent from Rs. 6,38,596 crore in FY2013-14 to Rs. 14,12,422 crore in FY2021-22. Talking about the Gross Direct Tax Collections, it increased by over 126.73 percent in FY2021-22 reaching a figure of Rs. 16,36,081 crore from Gross Direct Tax Collections of Rs. 7,21,604 crore in FY2013-14.
As of June 17, 2023, the Advance Tax collections for the first quarter of the FY 2023–24 were Rs 1,16,776 crore, up 13.70 percent from the Advance Tax revenues of Rs 1,02,707 crore for the same period of the Financial Year that was immediately prior. Corporation Tax (CIT) at Rs 92,784 crore and Personal Income Tax (PIT) at Rs 23,991 crore make up the Advance Tax Collection of Rs 1,16,776 crore as on June 17, 2023.
Refunds amounting to Rs. 39,578 crore have also been issued in the FY 2023-24 till 17.06.2023, as against refunds of Rs 30,414 crore issued during the corresponding period in the preceding Financial Year 2022-23, showing a growth of 30.13 percent.
Commenting on the significant increase in direct tax collections in FY2022-23, Vivek Jalan, partner, Tax Connect Advisory said, “Data accumulation tools deployed by the tax department which leads to taxpayer data being pulled and automatically reconciled, along with the expansion of tax deduction and tax collection at source [TDS and TCS] provisions to track transactions from the source through the value chain, appear to be leading to substantial gains in collections.”
The central government’s direct tax collection has increased more than four times in last 12 years. The direct tax collection in the FY2010-11 was Rs 4,45,994 crore this increased to Rs 8,49,713 crore in FY2016-17 and now it has further increased to Rs 16,61,000 crore in FY2022-23. The direct tax collection for the FY2022-23 is record high till date.
According to the time series data provided by the Central Board of Direct Taxes (CBDT), direct tax buoyancy, a measure of growth in the collection of personal income tax and corporation tax versus the growth in GDP rose to 2.52 in FY22, the highest level in the previous 15 years. A higher buoyancy indicates more effective tax collection. The highest buoyancy, 2.59, was observed in FY03, while it became negative (-1.21) in FY20. The CBDT highlighted the data for 22 years beginning in 2000–21. Tax buoyancy was not calculated for FY21 because both GDP and tax growth were negative. So buoyancy increased in FY22, most likely as a result of a low base effect.
One of the concerns is the prediction of a drop in direct tax collection in FY2023-24. The fiscal year 2022-23 has seen a record increase in net direct taxes, which are made up of personal income tax and the tax on corporate profits, exceeding the figures forecast in the Budget. Prior to the announcement of the Union Budget 2023–24 on February 1, 2023 a government source warned reporters that the predicted lower nominal GDP growth in 2023–24 on the basis of predictions of a worldwide recession could have an impact on income tax collection. In the current financial year, real GDP growth is projected to decrease to 6–6.5 percent, with nominal GDP growth also expected to be lower due to falling inflation.
But despite of these concerns, the latest data released by the ministry shows that there has been a remarkable improvement in the direct tax collections in the FY2023-24.
