Direct tax collections exceed revised estimates by ₹13,000 cr

Big boost from personal income tax helped the government receive over ₹19.58 lakh crore through direct taxes in fiscal year 2023-24. With this, collections exceeded both budget estimates (BE) and revised estimates (RE).

Direct taxes comprise personal income tax or PIT (Including securities transaction tax) and corporate income tax (CIT). Rise in direct taxes indicate a growth in personal income as well as profitability of businesses. Central Board of Indirect Taxes and Customs (CBIC) has already announced that overall indirect tax collection, including Customs and Central Excise Duty, has exceeded RE by a handsome margin, though it is yet to make the figures public.

According to a Finance Ministry statement, net collection of direct taxes (gross collection minus refund) rose to ₹19.58 lakh crore in FY24 which is 17.7 per cent higher than ₹16.64 lakh crore of FY23. Although the statement has not mentioned any reasons for rise, officials say that the rise in overall income level along with better compliance and ease of tax-paying enabled the government to get higher revenue.

Originally, the target of direct tax collection was ₹18.23 lakh crore, which was later revised to ₹19.45 lakh crore. Now, based on provisional data, collections have exceeded budget estimate and revised estimate by 7.7 per cent and 0.7 per cent respectively. This growth has been achieved despite much higher refund. “Refunds of ₹3.79 lakh crore have been issued in FY24 showing an increase of around 23 per cent over the refunds of ₹3.09 lakh crore issued in FY23,” the statement said.

Personal income tax, paid by non-business entities including individuals on their income, yielded a very impressive number. “The net personal income tax collection (including STT) (provisional) in FY24 is at ₹10.44 lakh crore and has shown a growth of 25.23 per centover the net personal income tax collection (including STT) of ₹8.33 lakh crore of the preceding year,” the statement said. Further, the net corporate tax collection rose to ₹9.11 lakh crore from ₹8.26 lakh crore of FY23, showing a growth of over 10 per cent.

Commenting on the number, Sumit Singhania, Partner with Deloitte India, said as the Indian economy wades through general election in the Q2, continued growth in direct tax collections signifies macro-economic buoyancy. “This is reassuring from the standpoint of continuity of fiscal discipline, which ought to allow the incoming administration to hit the ground running on policy reforms and keep the goal of improving taxpayers services at the core of tax reforms agenda,” he said.

Earlier this month, the Finance Ministry had reported that FY24 marks a milestone with a total gross GST collection of ₹20.18 lakh crore, an 11.7 per cent increase compared to the previous year. The average monthly collection for this fiscal year stands at ₹1.68 lakh crore, surpassing the previous year’s average of ₹1.5 lakh crore. Since GST is levied at end consumer, rise in collection shows improvement in consumption.

With the rise in all taxes, the expectation is that the final number of the fiscal deficit (difference between income and expenditure) would be less than the revised estimate of 5.8 per cent. The latest number will be known in the full budget, which will be presented after the formation of the new government following the general elections.

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