Exceeding Budget and Revised Estimates
In a remarkable fiscal performance, the Income Tax Department of India has reported a significant surge in net direct tax collections for the financial year ending March 2024. Collections soared to Rs 19.58 lakh crore, marking a 17.7 percent increase year-on-year, and notably exceeding both the budgeted and revised estimates.
The Central Board of Direct Taxes (CBDT) highlighted the achievement, noting that the net collections from income and corporate taxes—the primary components of direct taxes—outstripped the budget estimates by Rs 1.35 lakh crore (7.40 percent) and the revised estimates by Rs 13,000 crore for the 2023-24 financial year.
Refunds and Gross Collections
Despite issuing refunds amounting to Rs 3.79 lakh crore, a 22.74 percent rise from the previous fiscal year, the gross collection of Direct Taxes for FY 2023-24 stood at an impressive Rs 23.37 lakh crore. This figure represents an 18.48 percent growth compared to FY 2022-23.
Corporate and Personal Income Tax
The provisional data indicates robust growth in both corporate and personal income tax collections. Gross corporate tax collection increased by 13.06 percent to Rs 11.32 lakh crore, with net corporate tax collection showing a growth of 10.26 percent over the previous year. Personal income tax collection, including Securities Transaction Tax (STT), surged by 24.26 percent to Rs 12.01 lakh crore, with net personal income tax collection growing by an impressive 25.23 percent.
Fiscal Implications and Economic Outlook
This upswing in net direct tax collections provides a cushion for the Centre, potentially leading to a healthier fiscal deficit than anticipated. With indirect tax collection targets also surpassed for the year, and potential savings on the horizon, the overall fiscal deficit could show a better performance against the projected figures.
Monitoring the nominal GDP remains crucial, especially with revised data forthcoming. The Centre had projected a fiscal deficit of 5.8 percent of GDP in its revised estimates for the year.
Sustained Tax Buoyancy
The consistent tax buoyancy reflects the Centre’s success in surpassing overall collection targets for the second consecutive year. This has been attributed to improved monitoring, data processing, and sharing of indirect tax and other databases, which have been instrumental in identifying individuals who may underreport their income.
The tax department has been utilizing various data streams, such as high-value transactions, investments, and cash transactions, to encourage accurate income declaration by taxpayers. These data-driven strategies are key to ensuring compliance and contributing to the ongoing growth in tax revenue.
