The Centre’s advance direct tax receipts for the second quarter of the current fiscal from companies, LLPs and individuals rose by a robust 24% on year to Rs 2.38 trillion as per the data till Saturday, aided by a sharp increase in income tax receipts and a rebound in corporate tax collections.
Higher corporate profitability in Q2 amid an easing of input costs led to buoyancy in the quarterly advance tax mop-up. The advance tax receipts had grown by 14% on year in Q1FY24 and by 10% on year in Q2FY23.
Aided by advance tax and taxes deducted at source (TDS/ TCS), direct tax collections (post-refunds) came in at Rs 8.64 trillion at last count, up 23.4% on year. This is much higher than the 9.4% growth projected for the whole fiscal and indicates the annual target may be reached comfortably.
Direct tax receipts so far account for 47.4% of the FY24 target of Rs 18.23 trillion.
Earlier, a 10% decline in corporate tax collections in April-July period and a similar fall in excise mop-up had raised concerns about the pace of overall tax revenue growth. In April-July, the gross tax revenue (post-refunds mop-up before devolution to states) stood at Rs 8.94 trillion, just 2.8% higher than the corresponding period of last year, and against a little over 10.1% growth required to to meet the Budget Estimate. However, speaking with FE in Mumbai earlier this week, economic affairs secretary Ajay Seth had expressed confidence that the annual tax revenue target would be met.
Till September 16, direct tax collections comprised corporation tax of Rs 4.16 trillion compared with Rs 3.68 trillion till September 17 of FY23, an annual increase of 13%.
The turnaround in corporate tax receipts indicates that corporate profitability in Q2FY24 remained positive with raw material prices continuing the downward trajectory. The lower base from a year ago will also support profit growth in the Q2FY24, CareEdge said in a note recently. On a sample of 2,076 listed non-finance companies, CareEdge had estimated 39.8% growth in their profit after tax in Q1FY24.
Till September 16, 2023, income tax collections including securities transaction tax stood at Rs 4.48 trillion, showing a robust 36% annual increment.
Direct tax refunds declined by 10% on year to Rs 1.22 trillion till September 16 of FY24 compared with Rs 1.36 trillion till September 17 of FY3.
So far in the current fiscal, TDs and TCS receipts stood at Rs 5.14 trillion, securities transaction tax at Rs 13,352 crore and equalisation levy of Rs 1,581 crore.