Net direct tax receipts up 95% on-year in FY22

By: |
September 06, 2021 6:25 AM

The robust collections are despite a surge in refunds. Net direct tax collections were just Rs 1.9 lakh crore till September 2 of FY21, owing to the Covid-induced lockdowns hat hit economic activities.

Refunds almost doubled to Rs 67,401 crore as on August 31 from about Rs 36,000 crore as on June 30, 2021.Refunds almost doubled to Rs 67,401 crore as on August 31 from about Rs 36,000 crore as on June 30, 2021.

The Union government’s net (post-refunds) direct tax collections rose 95% on-year to Rs 3.7 lakh crore till September 2 of the current financial year, thanks to a low base, a pick-up in economic activities, higher corporate earnings and better compliance.

The robust collections are despite a surge in refunds. Net direct tax collections were just Rs 1.9 lakh crore till September 2 of FY21, owing to the Covid-induced lockdowns hat hit economic activities.

In fact, the net direct tax collections till September 2 appears to be substantially higher than the corresponding period of the pre-pandemic year of FY20. Such collections till September 2 this fiscal year were 31% higher than the receipts till August 31 in FY20.

However, for receipts to meet the annual target of Rs 11.08 lakh crore — which requires only a 17% growth — the collections have to remain robust in the remaining period of the fiscal too. Last year, the collections picked up in the second half of the year. The April 1 to September 2 receipts were just 33% of the FY22 target of Rs 11.08 lakh crore. Refunds have picked up after being slow in the initial months of the current financial year. Refunds almost doubled to Rs 67,401 crore as on August 31 from about Rs 36,000 crore as on June 30, 2021.

While private consumption and investments are yet to show the resilient strength predicted by government managers, the government’s tax revenues are showing strong growth. The Centre’s net tax receipts (including indirect taxes) rose 2.6 times on year to Rs 5.29 lakh crore or 32.2% of FY22BE in the April-July period, compared with a mere 12.4% of the corresponding target reported in the year-ago period. Thanks to steps taken to improve compliance and a shift of business away from the informal sector, GST also is yielding the revenue productivity its proponents ascribed to it. The greater formalisation of the economy after GST implementation is also aiding direct tax receipts.

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