India’s direct tax revenue jumped 23.8% on an annualised basis to ₹8.96 lakh crore till October 8 of the current financial year as corporate and personal earnings rose significantly, indicating sustained growth in economic activities, better tax administration and ease of compliance.
“Direct Tax collection, net of refunds, stands at ₹7.45 lakh crore which is 16.3% higher than the net collections for the corresponding period of last year. This collection is 52.46% of the total Budget Estimates (BE) of Direct Taxes for F. Y. 2022-23,” the finance ministry said in a statement on Sunday.
The provisional figures of direct tax collections up to October 8 continued to register “steady” growth, it said.
While gross corporate income-tax (CIT) grew at 16.73% during this period, the growth in personal income-tax (PIT), including securities transaction tax (STT), was 32.30%, it said. After adjustment of refunds, the net growth in CIT collections was 16.29% and that in PIT was 16.25% (including STT), it added.
“Refunds amounting to Rs.1.53 lakh crore have been issued during the period 1st April, 2022 to 8th October 2022, which are 81% higher than refunds issued during the same period in the preceding year,” the statement said.
Digitization of procedures, ease of compliance and better efficiency in tax administration was reflected in faster refunds, experts said.
Provisional gross direct tax collection up to September 8 for 2022-23 was Rs. 6.48 lakh crore, which was 35.46% higher than the gross collections for the corresponding period of last year, the finance ministry had said last month. On September 18, the ministry revised the figure, taking gross collection before adjusting for refunds at ₹8.36 lakh crore as on September 17.
Following in the footsteps of the Central Board of Indirect Taxes and Customs (CBIC), the Central Board of Direct Taxes (CBDT) has started publishing monthly revenue collections from September. While CBIC administers matters related to indirect taxes, including Goods and Services Tax (GST), excise and customs duties, CBDT is responsible for income tax related matters involving individuals and corporations. CBIC publishes monthly GST data on the first day of next month. Both CBIC and CBDT are arms of the finance ministry.
While addressing income-tax officials at an award ceremony on September 27, finance minister Nirmala Sitharaman appreciated the CBDT’s move to publish monthly data that would be an official indicator of economic growth. Tax data will be the “litmus test” for the economy, she said. Tax revenues, based on income and consumption, reflect economic health of an economy.
There has been robust indirect tax collection in September at ₹1.48 lakh crore, which was the third highest ever, breaching ₹1.40 lakh crore for the seventh consecutive months on strong business activities despite global economic slowdown, showing resilience of the Indian economy, experts said.
“Both GST and direct tax collections are robust, which reflects strong economic recovery. In fact, demand for skilled professionals in the job market is growing with higher pay packages compared to 2020 and 2021, which is also reflected in people paying higher income tax,” said Naveen Wadhwa, deputy general manager at Taxmann, a tax research and advisory firm. “Besides that, stock market performance has been good that is seen in the STT numbers. Indeed, better tax administration is also working in tandem.”
“With inflation reportedly running between 6-7%, it is imperative that tax collections show a healthy growth above the inflation rate. Strong economic growth coupled with better reporting seems to be supporting the collection figures,” said Rohinton Sidhwa, partner at consultancy firm Deloitte India. “While collections remain strong, the same also need to be supported by corporate investment cycles reviving post Covid.”