India’s net direct tax revenues up by 17.7% to Rs 19.58 lakh crore in FY 2023-24

By: Team India Tracker

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 preliminary data on direct tax collections for the Financial Year (FY) 2023–24, net collections increased by 17.70 percent to Rs. 19.58 lakh crore from Rs. 16.64 lakh crore in the previous Financial Year, or FY 2022–23.

The Union Budget for FY 2023–2024 included Budget Estimates (BE) for Direct Tax income of Rs. 18.23 lakh crore; they were later revised, and the Revised Estimates (RE) were set at Rs. 19.45 lakh crore. Provisional Direct Tax receipts have surpassed BE by 7.40 percent and RE by 0.67 percent (net of refunds).

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 provisional gross collection of direct taxes for the fiscal year 2023–2024 is Rs. 23.37 lakh crore, representing an increase of 18.48 percent over the gross collection of Rs. 19.72 lakh crore for the fiscal year 2022–2023.

                                                                                                  Source: Reserve Bank of India

With a provisional gross corporation tax revenue of Rs. 11.32 lakh crore in FY 2023–24, it represents a 13.06 percent increase over the previous year's gross corporate tax collection of Rs. 10 lakh crore. With a tentative net corporation tax revenue of Rs. 9.11 lakh crore in FY 2023–24, it represents a rise of 10.26 percent over the net corporate tax collection of Rs. 8.26 lakh crore in the previous year.

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.

With a provisional total of Rs. 12.01 lakh crore, the Gross Personal Income Tax collection (including STT) in FY 2023–2024 is a 24.26 percent increase over the previous year's gross collection of Rs. 9.67 lakh crore. With a provisional total of Rs. 10.44 lakh crore, the Net Personal Income Tax collection (including STT) in FY 2023–24 represents a 25.23 percent increase over the Net Personal Income Tax collection (including STT) of Rs. 8.33 lakh crore in the previous year.