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Economy 12-Feb, 2024

India’s net direct tax collection rises 20.25% y-o-y to Rs 15.60 lakh crore in current fiscal; tax collections jump by 160% in 10 years

By: Team India Tracker

India’s net direct tax collection rises 20.25% y-o-y to Rs 15.60 lakh crore in current fiscal; tax collections jump by 160% in 10 years

Based on data from the Indian government, over the last ten years, the number of taxpayers filing income tax returns has more than doubled to 7.78 crore. Image Source: IANS

Direct tax collections up to 10th February, 2024 show that gross collections are at Rs 18.38 lakh crore, which is 17.30 percent higher than the gross collections for the corresponding period of last year

In the current fiscal year, net direct tax collection has increased by 20 percent year over year to Rs 15.60 lakh crore, or 80 percent of the revised Budget Estimates for the entire fiscal year.
Refunds of taxes totaling Rs 2.77 lakh crore were distributed between April 1, 2023, and February 10, 2024. Both the corporate income tax (CIT) and the personal income tax (PIT) demonstrated consistent increases in gross revenue collections. The growth rate for PIT (PIT only) was 25.67 percent, compared to 9.16 percent for CIT. It further said that the net growth in CIT collections was 13.57 percent, while the net growth in PIT collections (PIT only) was 26.91 percent after adjustment for refunds.

“The provisional figures of direct tax collections continue to register steady growth. Direct tax collections up to 10th February, 2024 show that gross collections are at Rs 18.38 lakh crore, which is 17.30 percent higher than the gross collections for the corresponding period of last year,” the Central Board of Direct Taxes (CBDT) said in a statement.

Based on data from the Indian government, over the last ten years, the number of taxpayers filing income tax returns has more than doubled to 7.78 crore.  According to CBDT figures, the total number of Income Tax Returns (ITRs) filed in FY23 was 7.78 crore, which represents a 104.91 percent increase over the 3.8 crore ITRs filed in 2013–14.
It stated that over the same time period, net direct tax receipts rose by 160.52 percent, from Rs 6,38,596 crore in FY14 to Rs 16,63,686 crore in 2022–2023.  The direct tax to GDP ratio increased concurrently, rising from 5.62 percent to 6.11 percent.

Before accounting for refunds, the gross direct tax collection (provisional) for the fiscal year 2022–23 was 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.

Source: Reserve Bank of India

*Up to February 10, 2024

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.

A direct tax is one that is paid by an individual or group of individuals directly to the body that levied it. For instance, an individual taxpayer may pay direct taxes to the government for a variety of reasons, such as income tax, real estate tax, personal property tax, or asset taxes. According to the sources from revenue department, the reasons for high tax collection are adoption of digital initiatives aimed at simplifying compliance and expansion of the tax base in recent years

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 was the prediction of a drop in direct tax collection in FY2023-24. The fiscal year 2022-23 had 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. Looking at the tax collection figures in the current fiscal, it can be said that the tax collection target can be comfortably achieved.

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