Wednesday, 09 Oct, 2024
By: Yash Gupte
The provisional Direct Tax collections have surpassed the BE by 16.97 percent and the RE by 0.69 percent (net of refunds). Image Source: IANS
Before accounting for refunds, the gross direct tax collection (provisional) for the fiscal year 2022–23 is Rs. 19.68 lakh crore, up 20.33 percent from the gross collection of Rs. 16.36 lakh crore in the previous financial year.
The Ministry of Finance recently released the provisional figures of Direct Tax collections for the financial year 2022-23. The net direct tax revenue in the FY2022-23 is Rs 16.61 lakh crore, compared to Rs 14.12 lakh crore in the preceding FY2021-22, registering an increase of 17.63 percent. The Revised Estimates (RE) were set at Rs.16.50 lakh crore after the Budget Estimates (BE) for Direct Tax income in the Union Budget for FY 2022–23 were revised to Rs.14.20 lakh crore. The provisional Direct Tax collections have surpassed the BE by 16.97 percent and the RE by 0.69 percent (net of refunds).
Before accounting for refunds, the gross direct tax collection (provisional) for the fiscal year 2022–23 is Rs. 19.68 lakh crore, up 20.33 percent from the gross collection of Rs. 16.36 lakh crore in the previous financial year. The gross corporate tax collection (provisional) for the fiscal year 2022–23 is Rs. 10,04,118 crore and has increased by 16.91 percent from the previous year's gross corporate tax collection of Rs. 8,58,849 crore.
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 gross personal income tax collection for FY 2022–23 is Rs. 9,60,764 crore, a 24.23 percent increase over the gross personal income tax collection of Rs. 7,73,389 crore for the year prior. In comparison to the refunds of Rs. 2,23,658 crore issued in FY 2021–2022, refunds of Rs. 3,07,352 crore were issued in FY 2022–2023—a rise of 37.42%. The government has projected a 10.5 percent growth in revenues from corporate and individual income tax to Rs 18.23 lakh crore in the current fiscal. Direct tax revenue, which includes income and corporate taxes, is anticipated to increase by more than 17 percent in FY23-24. Also, it must be noted that the FY22-23 has also witnessed record growth in gross corporate income tax (CIT) and gross personal income tax. This shows that in spite of tax cuts announced by the Finance Minister in the Union Budget 2023-24, there has been a significant growth in the collection of corporate income tax.
Source: Reserve Bank of India
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.
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.
