Budget 2020 India: Also, the GST collections seem to be rising (January mop-up was about Rs 1.11 lakh crore, the second highest in any month since the launch of the tax) and if the trend is sustained, the shortfall could be reduced to that extent.
Union Budget 2020 India: The Budget has lowered the gross tax revenue (GTR) estimate for FY20 by a massive Rs 3 lakh crore or 12% with sharpest cut of Rs 1.55 lakh crore or 20% in corporate tax estimate, but if the April-December data put out by the Controller General of Accounts recently and trend share of collections in the fourth quarter of a financial year are any guidance, the actual GTR could still fall short of the revised estimate (RE) by around Rs 1 lakh crore.
That could result in a decline of at least Rs 50,000 crore in Centre’s net tax receipts, necessitating a corresponding expenditure compression of over 20 bps of GDP to avoid a further slippage from the relaxed fiscal deficit target of 3.8%. Alternatively, the government might ask the RBI, which transferred a record Rs 1.48 lakh crore to the government this fiscal, for an interim dividend or force some cash-rich PSUs to prepay their taxes or increase dividend payouts.
The Centre’s GTR stood at Rs 13.83 lakh crore in April-December, down 2.9% year-on-year. The RE pegs GTR growth at 3.8%.
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As per an FE analysis, the approximate shortfall in each tax category from the respective REs could be as follows: personal income tax: Rs 63,000 crore; corporate tax: Rs 37,000 crore; GST (including compensation cess): Rs 11,000 crore, customs: Rs 21,000 crore; excise: Rs 21,000 crore. While these add up to over Rs 1.5 lakh crore, the government could manage to mop up some Rs 25,000-30,000 crore from the indirect tax resolution scheme (the amount tax-payers have agreed to settle their disputes is close to Rs 40,000 crore and a bulk of it could be collected before March-end). Also, the GST collections seem to be rising (January mop-up was about Rs 1.11 lakh crore, the second highest in any month since the launch of the tax) and if the trend is sustained, the shortfall could be reduced to that extent.