The Centre may rake in additional net tax receipts of around Rs 90,000 crore in FY21 over the revised estimate (RE) of Rs 13.4 lakh crore, due to higher mop-ups from corporate and personal-income taxes. It may also get an additional Rs 30,000 crore from ‘Union excise duties’ net of transfers to the states.
According to an FE analysis, gross (pre-devolution) corporate tax receipts in the current financial year could be as high as Rs 5.75 lakh crore, as against RE of Rs 4.46 lakh crore. The estimate is based on revenues gathered in April-January period and assumptions of likely revenues in the last two months of the fiscal based on historical patterns.
Similarly, gross receipts of personal income tax (PIT) could turn out to be Rs 4.84 lakh crore against RE of `4.59 lakh crore. So gross direct tax receipts in the current financial year could be a neat Rs 1.5 lakh crore higher than the respective RE at Rs 10.55 lakh crore. The Centre nets 58% of the gross receipts from these taxes after mandatory transfers to states.
As far as ‘Union excise duties’ are concerned, only a measly 4% is shareable with the states, so the additional Rs 30,000 crore would go almost solely to the Centre’s coffers.
According to the second advance estimate released by the National Statistics Office (NSO) recently, nominal GDP on which key budget numbers are benchmarked, is estimated to contract by 3.8% in FY21, against a 4.2% fall estimated earlier. While this will reduce FY21 fiscal deficit marginally from 9.5% (RE) of GDP to 9.4%, net tax receipts being higher than RE by Rs 1.2 lakh crore from the three heads mentioned above could lower the deficit by another 60 basis points points to 8.8% of the GDP, at the RE level of expenditure and other revenue items.
Thanks to the comfort on the tax revenue front, the government has already cancelled the planned Rs 20,000 crore borrowing which was scheduled for Friday.
Customs collections are seen on target. Since a lot of accounting flexibility is available for the Centre on the GST front due to the floating I-GST account, an estimate of Central GST mop-up at this stage is prone to corrections. Of course, there is no shortfall seen on this account.
As per the Budget FY22, the RE on revenue from ‘Union Excise Duties’ for FY21 is set at Rs 3.61 lakh crore, as against Rs 2.67 lakh crore collected in FY20. As per data put out by the Controller General of Accounts (CGA), `2.75 lakh crore was collected from these levies in April-January period. Another Rs 1.17 lakh crore could be garnered in February-March, going by historical trend; this would take the total mop-up to Rs 3.9 lakh crore. Nearly 100% of the ‘Union Excise Duties’ receipts are on account of assorted levies on petrol and diesel.
FE computed the likely gross tax receipts for FY21 as follows: as per the CGA data, gross corporate tax receipts in April-January period was Rs 3.34 lakh crore; in the months when the advance tax payments are not scheduled, the collections have been Rs 25,000 crore or thereabouts recently, so February mop-up could be Rs 25,000 crore; In December, when the third installment of advance taxes were paid by Corporate India, the collections were Rs 1.26 lakh crore; going by the trend in recent years, collections in March, the final month of a fiscal year, typically tend to be 70% higher than in December and so it could be Rs 2.16 lakh crore this year. That means in February-March period, the gross corporate tax mop-up could be Rs 2.4 lakh crore. If this is added to the `3.34 lakh crore collected in April-January, the total receipts in the year would be Rs 5.75 lakh crore. PIT and Excise collections for the year have also been similarly estimated.