India’s net direct tax collections hit 13.73 lakh crore till March 10: Up by 16.78% year-on-year

By: Yash Gupte

As of March 10, 2023, gross direct tax revenues for the fiscal year 2022–23 were Rs 16.68 lakh crore, up 22.58 percent from the same period last year.

The Ministry of Finance recently released the provisional figures of Direct Tax collections up to March 10, 2023. As of March 10, 2023, gross direct tax revenues for the fiscal year 2022–23 were Rs 16.68 lakh crore, up 22.58 percent from the same period last year. Net of refunds, direct tax receipts are Rs. 13.73 lakh crore, which is 16.78 percent more than net collections for the same period previous year. This collection is 96.67 percent of the total Budget Estimates of Direct Taxes for FY 2022-23 and 83.19 percent of the Revised Estimates of Direct Taxes for FY 2022-23.

The government added that from 1 April 2022 to 10 March 2023, refunds of Rs. 2.95 lakh crore were issued, which is 59.44 percent more than what was done during the same time period the year before. 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 next fiscal. Direct tax revenue, which includes income and corporate taxes, is anticipated to increase by more than 17 percent in FY23. Also, it must be noted that the FY23 has also witnessed record growth in gross corporate income tax (CIT) and gross personal income tax. According to a CBDT press statement, this collection represents 83.19 percent of the revised direct tax estimates for the fiscal year 2022–2023 and 96.67 percent of the entire budget estimates. In 2022–2023, the Central Government is most likely to hit its revised 16.5 lakh crore direct tax collection target.

In terms of gross revenue collections, the growth rates for Corporate Income Tax (CIT) and Personal Income Tax (PIT) are 18.08 percent for CIT and 27.57 percent for PIT, respectively. Following the adjustment for refunds, the net growth in CIT and PIT collections is 13.62 percent and 20.73 percent, respectively. 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

*Up to March 10, 2023

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 16,68,000 crore in FY2022-23 and that too the direct tax collection for the current financial year is recorded till March 10, 2023. 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 current fiscal year 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. Next fiscal 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. In March, tax collections usually rise remarkably due to quarterly and yearly closures.