Union Budget 2019-20: Last year, central government's GST collection registered a decline of Rs 1 lakh crore against the budget estimate.
Union Budget 2019 India: The Union government is banking on buoyancy in the corporate tax collection to achieve its revenue collection target this year as other sources like GST fail to meet budget targets. Over the years, corporation tax has emerged as the biggest source of tax revenue of the central government. In this year’s budget, finance minister Nirmala Sitharaman has projected corporate tax collection to be Rs 7.66 lakh crore, that is an increase of over 14% from the last year’s collection. GST collection is expected to be the second biggest source of government revenue followed by the income tax.
According to budget estimates, corporate tax will account for nearly one-third of the government’s gross tax revenue receipts. The government’s total corporate tax collection in the fiscal will be equal to more than 46% of its net tax revenue in the year.
The government is leaning heavily on increased corporate tax collection to meet its revenue collection target as last year GST collection declined by Rs one lakh crore from the budget estimates. While presenting the last year’s budget, then finance minister Arun Jaitley had pegged GST collection to be Rs 7.43 lakh crore in 2018-19, however, according to revised estimate, the Centre collected Rs 6.43 lakh crore in the year.
The government has projected that its corporate tax collection this year will rise by Rs 95,000 crore as against the growth of Rs one lakh crore between 2017-18 and 2018-19. In 2017-18, the Union government’s corporate tax collection was Rs 5.71 lakh crore which increased by Rs one lakh crore to Rs 6.71 lakh crore in 2018-19 as per the revised estimates.
In the budget, the government has pegged nominal GDP growth to be at 12 percent. In such a situation, the corporate tax collection target looks achievable.
“All the things should usually correspond with the nominal GDP growth rate, ” said economist NR Bhanumurthy.
The government estimates that of the gross corporate tax collection of Rs 7.66 lakh crore, 86% or Rs 6.57 lakh crore will come from the collection of the tax, while 10% or Rs 73,950 crore will come from the surcharge and nearly 5% or Rs 34,738 crore will come from the health and education cess. This way, nearly 15% of the total corporate tax collection of Rs 7.66 lakh crore will come from surcharge and cess alone.