The gross collection of tax on corporate and individual earnings jumped nearly 24 per cent so far in the current fiscal year to Rs 8.98 lakh crore, the tax department said on Sunday.
This includes a 32 per cent growth in personal income tax (including Securities Transaction Tax) mop up and 16.73 per cent increase in corporate tax revenues over the same period last year.
After adjusting for refunds, the net direct tax collections between April 1 – October 8 stood at Rs 7.45 lakh crore, which is 52.46 per cent of the Budget estimates (BE) for the full year tax collection target, the department said
The Budget had estimated direct tax collection at Rs 14.20 lakh crore this fiscal, higher than Rs 14.10 lakh crore collected last fiscal (2021-22). Tax on corporate and individual income makes up for direct taxes.
“Direct Tax collections up to 8th October, 2022 show that gross collections are at Rs 8.98 lakh crore which is 23.8 per cent higher than the gross collections for the corresponding period of last year,” the tax department said in a statement.
Refunds amounting to Rs 1.53 lakh crore have been issued between April 1-october 8, an increase of 81 per cent over the corresponding period last year.
After adjusting refunds, net direct tax collection stood at Rs 7.45 lakh crore, 16.3 per cent higher over the year-ago period. This includes a 16.25 per cent increase in PIT (including STT) and 16.29 per cent in corporate tax.
Tax collection is an indicator of economic activity in any country. But in India, the robust tax collection was despite a slowdown in industrial production and exports.
Some analysts believe that the economic growth has lost momentum but corporate profits are keeping the engine running.
Merchandise exports have lost on the momentum of last year’s surge and shrunk by 3.5 per cent in September. Trade deficit has nearly doubled in the first six months.
IIP growth was subdued at 2.4 per cent in July while ‘core sector’ hit a nine-month low of 3.3 per cent in August.
Collection from levy of tax on goods and services sold (GST) has flattened at around Rs 1.45-1.46 lakh crore per month.
The Reserve Bank of India (RBI) last month cut its production of India’s GDP growth in the current fiscal to 7 per cent from 7.2 per cent previously estimated.
Other rating agencies too have lowered the economic growth projection for India citing impact of the geopolitical tensions, tightening global financial conditions and slowing external demand.
Deloitte India Partner Rohinton Sidhwa said with inflation running between 6-7 per cent, it is imperative that tax collections show a healthy growth above the inflation rate.
“Strong economic growth coupled with better reporting seems to be supporting the collection figures. While collections remain strong the same also need to be supported by corporate investment cycles reviving post COVID,” Sidhwa said.