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India’s net direct tax collection up by 20% to over Rs 18.90 lakh crore in current fiscal

By: Team India Tracker

India’s net direct tax collection up by 20% to over Rs 18.90 lakh crore in current fiscal

Apart from predicting an increase in the direct tax collection, the government had also estimated a rise in GDP growth. Image Source: IANS

The preliminary total advance tax revenues for the fiscal year 2023–24 were Rs 9,11,534 crore on March 17, 2024, compared to Rs 7,45,246 crore for the same period in the previous fiscal year (2022–2023), indicating a 22.31 percent increase.

According to the preliminary Direct Tax collections numbers for the Financial Year 2023–24 (as of March 17, 2024), Net collections are at Rs. 18,90,259 crore, up 19.8 percent from Rs. 15,76,776 crore in the same period of the previous Financial Year (i.e., FY 2022-23).

Corporation Tax (CIT) at Rs. 9,14,469 crore (net of refund) and Personal Income Tax (PIT) including Securities Transaction Tax (STT) at Rs. 9,72,224 crore (net of refund) make up the Rs. 18,90,259 crore (as of March 17, 2024) Net Direct Tax collection.

Finance Minister Nirmala Sitharaman increased the direct tax collections prediction for FY24 from the budget estimate of Rs 18.20 lakh crore to Rs 19.45 lakh crore for the current fiscal year during this year's Budget address.

The preliminary total advance tax revenues for the fiscal year 2023–24 were Rs 9,11,534 crore on March 17, 2024, compared to Rs 7,45,246 crore for the same period in the previous fiscal year (2022–2023), indicating a 22.31 percent increase.

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.

Apart from predicting an increase in the direct tax collection, the government had also estimated a rise in GDP growth. Real GDP or GDP at Constant (2011-12) Prices in the year 2023-24 is estimated at Rs 172.90 lakh crore, against the First Revised Estimates (FRE) of GDP for the year 2022-23 of Rs 160.71 lakh crore. The growth in real GDP during 2023-24 is estimated at 7.6 percent as compared to 7.0 percent in 2022-23.

Source: Reserve Bank of India

*Up to March 17, 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.

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.

According to the data released by the Central Board of Direct Taxes (CBDT), India’s direct tax to GDP ratio hit a 15 year high of 6.11 percent in 2022-23. According to the data, direct taxes' share of overall tax collections has returned to pre-pandemic levels. Direct taxes primarily consist of corporation and personal income taxes. Direct tax revenue increased to 54.62 percent of total tax income in 2022–23 from 52.27 percent in 2021–22 and 46.84 percent in 2020–21, the lowest percentage in fifteen years.

According to the tax administration, the 77.8 million income tax returns filed in FY23 more than doubled the 38 million returns made in FY14. In FY23, the cost of collecting direct taxes dropped from 0.57 percent of total taxes collected in FY14 to 0.51 percent due to an increase in the use of technology and data analytics in tax administration.

 

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