The Centre’s advance direct tax collections for the June quarter from companies, LLPs and individuals rose 15% on year to Rs 1.16 trillion by the Thursday deadline, aided by a strong earnings outlook among a section of Corporate India, including banks, auto companies and oil marketers. Better compliance, primarily of state-run companies, also seemingly helped.
Boosted by advance taxes, direct tax collections (post-refunds) came in at Rs 3.78 trillion at last count, up 12% on year. This was higher than the 9.4% growth projected for the whole fiscal.
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The advance tax collections for Q1FY24 included corporation tax of Rs 92,173 crore (up 17% on year), while advance payment of personal income tax stood at Rs 23,513 crore, an annual increase of just 6%.
While consumption demand is still muted leading to slow topline growth, softer input prices have boosted the operating margins of companies in sectors like energy and construction. Also, banks and other financial sector entities have benefited from strong credit growth.
The advance tax growth in Q1FY23 was 33% till June 16, 2022, while net direct tax collections showed 45% growth during the period. This was helped by a lingering favourable base effect.
The net (after refunds) direct tax collections target for FY24 is Rs 18.23 trillion, against the collections of Rs 16.67 trillion in FY23.
Even after the advance tax deadline, amounts continue to trickle in for a few more days. Going by the trends so far, net direct tax collections are poised to exceed the FY24 target by a decent margin as tax collections usually pick up Q2 onwards.
The gross direct tax receipts (before refunds) stood at Rs 4.17 trillion as on June 15, 2023, showing an annual increase of 12.7% over the collections of the preceding year. This includes corporation tax at around Rs 1.86 trillion (-2.6% on year) and income tax of around Rs 2.25 trillion (26%). There have been much higher refunds this year of corporate tax collections at Rs 30,312 crore so far this fiscal.
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Of the gross collections, the tax deducted at source came in at Rs 2.69 trillion (up 17% on year), self-assessment tax at Rs 17,834 crore, regular assessment tax at Rs 9,911 crore and equalisation levy at Rs 603 crore.
As on June 15 of FY24, total refunds (personal income tax and corporation tax) amounting to Rs 39,390 crore have also been issued, showing an increase of 30% on year.