The union finance ministry on Wednesday reported a 24.58% year-on-year increase in gross direct tax collections to ₹14.71 lakh crore up to January 10 in the current financial year (2022-23) with significantly higher corporate and personal income tax collections signifying robust economic recovery, improved compliance and better tax administration.
Direct Tax collections, net of refunds, grew by 19.55% to ₹12.31 lakh crore as compared to the net direct tax revenue for the corresponding period of previous year, provisional data released by the finance ministry said.
The higher collections have been driven by high nominal growth, with the latest estimates putting it at 15.4%, way high of the government’s earlier projection of 11.1%. Nominal growth is the metric that influences tax collections; it includes inflation, which has been high for much of 2022-23, although it is now beginning to slide.
With both growth and inflation expected to ease in 2023-24, nominal growth will also come down, affecting tax collections. For now, though, they remain high.
“This collection is 86.68% of the total Budget Estimates (BE) of Direct Taxes for FY 2022-23,” the ministry said in a statement. The BE of direct tax collections was ₹14.20 lakh crore in 2022-23. That for corporation income tax (CIT) was ₹7.20 lakh crore and estimates for taxes on income or personal income tax (PIT) was 7 lakh crore.
As on January 10, the growth rates for CIT and PIT (in terms of gross revenue collections) are 19.72% and 30.46% (including securities transaction tax) respectively. “After adjustment of refunds, the net growth in CIT collections is 18.33% and that in PIT collections is 21.64% (PIT only)/ 20.97% (PIT including STT),” the ministry’s statement added.
{{/usCountry}}As on January 10, the growth rates for CIT and PIT (in terms of gross revenue collections) are 19.72% and 30.46% (including securities transaction tax) respectively. “After adjustment of refunds, the net growth in CIT collections is 18.33% and that in PIT collections is 21.64% (PIT only)/ 20.97% (PIT including STT),” the ministry’s statement added.
{{/usCountry}}“Compared to other countries, Indian economy is doing well, which is reflecting in increased income of individuals, professionals and corporates. The government has also introduced several reforms in the taxation system, which is encouraging people to pay taxes. Besides, the use of technology has made compliance necessary. Going forward, the government should further simplify the system and make compliance easier and focus on expanding the tax base,” said Abhishek A Rastogi, author and legal professional on tax-related matters.
Refunds amounting to ₹2.40 lakh crore have been issued from April 1, 2022 to January 10, 2023, 58.74% higher than refunds issued during the same period in the preceding year, the ministry said. .