The government’s direct tax collections – net of refunds– are seen “comfortably” crossing Rs 19 trillion in the current fiscal year, a finance ministry official told FE.
“Direct tax collections will comfortably cross Rs 19 trillion in FY24, however, Rs 20 trillion seems difficult,” the source said.
The source also said that the number of income tax returns filed in FY24 would be close to 81.5 million, which would be 4.8% higher than 77.8 million returns filed in FY23.
The Union Budget has pegged “gross” direct tax collections (net of refunds, but before transfers to states) in FY24 at Rs 18.23 trillion, which is 11.6% higher than the actual collections of FY23. As of October 9, the collections stood at Rs 9.57 trillion, up 21.8% on year.
The sharper-than-budgeted rise in direct tax mop-up is mainly due to the jump in personal income tax (PIT) collections, as compared to corporate tax collections.
As of October 9, PIT collections were up 32.5% year-on-year; whereas, corporate tax collections were up by 12.4%.
The goods and services tax (GST) collections are also showing buoyancy in growth. In the first half of FY24, total Central GST collections stood at Rs 4.14 trillion, 15.9% higher than the corresponding period of last year. This is much higher than 12% growth in CGST collections projected in the Budget, indicating total collections could surpass the Budget estimate of Rs 9.57 trillion.
A higher-than-Budgeted tax collection may provide comfort to the government in meeting its fiscal deficit target of 5.9% of GDP for the current fiscal year at a time when it is also likely to incur a higher-than-Budgeted expenditure – particularly with respect to subsidies.
The finance ministry said in its monthly economic report for September: “The Union Government remains solid with steady revenue growth, especially in direct taxes, and
prudent rationalisation of revenue expenditure which has enabled the front-loading of capital
expenditure while keeping the market borrowing programme tied to the budgeted target.”