The monthly average required to achieve the estimate stands at Rs 1.1 lakh crore for 2019-20
The revised estimate (RE) of gross tax revenue for 2018-19 came in only marginally lower at Rs22.5 lakh crore compared with budget estimate (BE) of Rs22.7 lakh crore but net tax revenue to the Centre at Rs14.8 lakh crore has been spot on target after devolution to states. A Rs1 lakh-crore deficit is estimated in the Centre’s Goods and Services Tax (GST) collection — which includes central GST, UTGST, IGST and compensation cess — compared with the BE.
The BE for gross tax revenue for 2019-20 has been kept at Rs25.5 lakh crore in the Interim Budget, a growth of 13.5% over the revised estimate (RE) of the current fiscal. Despite the GST revenue shortfall, the Interim Budget has estimated 18.2% growth in GST at Rs7.64 lakh crore for the next fiscal.
The monthly average required to achieve the estimate stands at Rs1.1 lakh crore for 2019-20. However, the monthly rate during April 2018-January 2019 period has been much lower at Rs97,100 crore. Rate cuts have been effected on nearly 400 out of 1,200 items since GST was rolled out in July 2017. These rate reductions, interim finance minister Piyush Goyal said, have cost the government Rs80,000 crore annually in revenue.
Pratik Jain, Partner and Leader Indirect Tax, PwC India said: “It is interesting to see that a growth of around 20% has been projected on Central GST collections in 2019-20 over the current year, whereas the overall growth in collection in 2018-19 has been around 8% over 2017-18.
Achieving this ambitious growth target would call for substantial expansion in tax base, requiring stringent measures to plug the tax leakages.”
On the direct tax front, the government collected Rs12 lakh crore in the current fiscal, according to the RE in the Interim Budget, compared to Rs11.5 lakh crore of BE. For financial year 2019-20, the direct tax collection has been estimated at Rs13.7 lakh crore, a growth of 14% from RE of current fiscal.
The direct tax portion of the total tax revenue for financial year 2018-19 stood at 53.4%, which is the highest since financial year 2014-15 when it was over 56%.
The direct tax to GDP ratio for the current fiscal was 6.3%, which is the highest in 11 years.
The same ratio was achieved in financial year 2007-08.
While the personal income tax component of direct tax came in line with BE, the corporation tax collection was 8% higher at Rs6.7 lakh crore compared with BE for financial year 2018-19.
“The tax collections increased significantly from Rs6.38 lakh crore in 2013-14 to almost Rs12 lakh crore this year. The number of returns filed have also increased from 3.79 crore to 6.85 crore, showing 80% growth in tax base,” Goyal said.
He added that within next two years, all verification and assessment of income tax returns selected for scrutiny will be done electronically through “anonymised back office, manned by tax experts and officials, without any personal interface between taxpayers and tax officers.”
Once the IT infrastructure is in place, all returns would be processed in twenty four hours and refunds issued simultaneously.
Demonetisation of high denomination bank notes and drive against black money have brought undisclosed income of about Rs1.3 lakh crore under tax net.
The anti-black money measures such as Black Money Law, the Fugitive Criminal Offenders Act and demonetisation have together led to seizure and attachment of assets worth approximately Rs50,000 crore, and compelled holders of large cash currency to disclose their source of earnings.