Direct Tax Revenue Surges, Outperforming Estimates
The Central government’s fiscal prudence seems to have paid dividends as the Central Board of Direct Taxes (CBDT) reported an impressive direct tax revenue collection for FY24. After accounting for refunds, the figures stood at a robust ₹19.58 trillion, marking a significant 17.7% growth from the previous year. This performance has comfortably surpassed the government’s revised estimates of ₹19.45 trillion, which was already an upward revision from the original forecast of ₹18.23 trillion.
Investors seeking the best stocks to invest in may find encouragement in these numbers, as they reflect a healthy economic environment conducive to corporate profitability and, by extension, best future stocks prospects. The best stocks for future growth are often found in economies showing strong fiscal health and robust tax collection is a key indicator of this.
The surge in personal income tax collection is particularly noteworthy, with receipts reaching ₹10.44 trillion after refunds, a 25.23% increase year-on-year. Corporate tax collections also showed resilience, with a 10% growth amounting to ₹9.11 trillion. These figures suggest a direct tax buoyancy of 1.9, indicating that direct tax collections are growing at nearly twice the rate of the economy’s expansion.
With the economy estimated to have grown by 9.1% in nominal terms according to the statistics ministry, the increasing share of direct taxes in the Centre’s overall tax receipts is evident. In FY25, direct taxes are expected to account for 57.4% of total tax revenue, up from 54.4% in FY24 projections.
For those considering good stocks to invest in, the government’s conservative assumption of a 13% growth in corporate and personal income tax collections for FY25 might be an area to watch. The stellar performance in FY24 could prompt a revision of these targets during the full-year budget presentation in July.
The CBDT also highlighted that it has issued tax refunds totaling ₹3.79 trillion in FY24, marking a 22.7% increase over the previous fiscal year. Before adjustments, gross direct tax collection for FY24 was an impressive ₹23.37 trillion, an 18.48% year-on-year growth.
This fiscal success story is complemented by strong Goods and Services Tax (GST) collections, with the Centre and states reporting a record gross GST collection of ₹20.18 trillion for FY24, an 11.7% increase over FY23.
As investors look for the best share to buy for long term, these robust economic indicators could provide a roadmap for identifying sectors and companies that are poised for sustainable growth. With the government’s fiscal management demonstrating effectiveness, the search for the best future stocks may well be influenced by these positive trends.
