The government’s direct tax-to-GDP ratio stood at a 23-year high of 6.11% in FY23, data released by the Central Board of Direct Taxes showed on Tuesday.
The Centre’s direct tax collections rose 17.8% year-on-year at Rs 16.6 trillion in FY23. Corporate tax collections during the year stood at Rs 8.26 trillion, up 16% on year, and income tax collections stood at Rs 8.33 trillion, 19.6% higher on year.
Direct tax buoyancy — rate of growth of tax mop-up in comparison to nominal GDP growth– , however, stood at 1.2 in FY23 as compared to 2.5 in FY22. Statistically, the buoyancy of a tax system gauges the overall responsiveness of tax revenue to variations in the GDP, and tax policies over time.
In H1 of FY24, the direct tax buoyancy stood at 3.0, due to sharp growth in income tax collections. Income tax buoyancy came in at 3.6 and corporate tax at 2.3.
Further, the government’s direct tax collections contribution to total tax mop-up stood at a four-year high of 54.62% in FY23 from 52.27% in FY22, the CBDT data showed.
Also, the cost of collection with respect to direct tax mop-up reduced to the lowest in 23 years at 0.51%. In FY23, total number of income tax returns filed stood at 77.82 million as compared to 73.05 million in FY22.