With barely three weeks to go for the Budget, the government on Wednesday said it will achieve the tax revenue target for this fiscal with larger-than-budgeted indirect tax collections making up for a possible shortfall in direct tax revenue.
The finance ministry said the government has mopped up R10.66 lakh crore from taxes till January 30, R5.22 lakh crore from direct taxes and R5.44 lakh crore via indirect taxes. Tax collections in the first 10 months of the year were 73.5% of the annual Budget target. “We are optimistic of achieving our annual target of tax revenue this year… Now, these things probably indicate there are new investments in the country,” revenue secretary Hasmukh Adhia said in a YouTube message.
The growth in direct tax collections has been 10.9% so far, compared with the previous year, while a growth of 33% was recorded in indirect tax collections.
“Over the years there has been a focus on widening the tax net and plugging the loopholes. The revenue department’s drives to encourage people to comply with tax provisions and file their tax returns, bringing in more payments and transactions within the ambit of tax deduction and widening of the services tax net by bring in most of the services under the tax umbrella, have helped increase tax collections,” said Vikas Vasal, partner (tax) at KPMG in India.
In direct tax collections, the government is witnessing a ‘robust’ growth both in corporate tax and personal income tax. “In corporate tax collections, the growth rate so far is 10.44% and in the personal income tax the growth has been 11.8%” Adhia added.
In other words, 65% of the annual target has been achieved in direct tax collections.
“We see a small shortfall coming up. But this would be made good by indirect tax collections, wherein we have seen that 88% of the target has already been achieved till January 30. So, we expect another Rs 40,000 crore to come from indirect taxes, which will make good in the shortfall in direct taxes,” the revenue secretary explained.
Adhia said that after analysing the trend of tax collections in specific items, there has been a growth in customs duty revenue. For instance, customs duty revenue from electrical machinery has seen a rise of 34.4%.
“Now, these things probably indicate there are new investments in the country for which all these machinery have been imported. If we see the trend of revenue growth in services sector, the rate is 27.2%. But if we see the growth in banking and financial services it is 44.6% and in works and contracts it is 39.9% and in goods and transportation services it is 41%. All these are indicators of economic growth in the country. This actually supports the latest figure of GDP growth,” Adhia said.