Govt's direct tax collections touch 85% of FY22 Budget target

The Centre’s direct tax collections are on course to exceed the budget target for 2021-22 on the back of robust advance tax mop up in the third quarter of the fiscal, providing the government with additional spending room to fuel economic recovery amid Omicron fears.

The advance tax mop up in the October to December period rose by nearly 50 per cent year-on-year, at Rs 1.16 lakh crore compared to Rs 92,000 crore. Advance tax, which is paid as and when the money is earned in four installments rather at the end of the fiscal year, saw a 65 per cent growth in the mop up in the April to December period at Rs 3.47 lakh crore.

Overall direct tax collections after refunds comprising the corporation tax and personal income tax grew by 61 per cent to Rs 9.45 lakh crore. It is 85 per cent of the budget target for the entire fiscal 2021-22 of Rs 11.08 lakh crore. In fact, the collections are 40 per cent higher than the pre-Covid period of 2019-20.  Gross direct tax collections (before refunds) stood at Rs 10.8 lakh crore, which 47 per cent higher than the corresponding period of last year. Refunds are down 8 per cent viz a viz last year at Rs 1.35 lakh crore.

“The better-than-expected tax collections are a result of improved economic outlook, better enforcement and easier compliance,” said a government official.

Corporation tax collections are up 70 per cent in the fiscal so far at Rs 5.15 lakh crore and is just Rs 30000 crore short of the full fiscal’s target of Rs 5.45 lakh crore. Personal income tax grew by 52 per cent to Rs 4.1 lakh crore as on December 16.

The share of corporation tax in overall direct tax collections was back to the 2019-20 levels of 54 per cent after falling to 50 per cent last year.

Mumbai recorded the highest collection at Rs 3.2 lakh crore, a growth of 67 per cent over last year. Bengaluru, Delhi, and Chennai posted growth in direct tax mop up by 49 per cent, 53 per cent and 57 per cent respectively.

Last year, the direct tax mop up at Rs 9.47 trillion was 9.7 per cent lower than the previous year's due to the impact of the pandemic, but exceeded the revised estimates, which stood at Rs 9.05 trillion.

Officials have attributed also to increased enforcement due to the sharing of goods and services tax data with the Central Board of Direct Taxes (CBDT).

The advance tax mop up in the October to December period rose by nearly 50 per cent year-on-year, at Rs 1.16 lakh crore compared to Rs 92000 crore. Advance tax, which is paid as and when the money is earned in four installments rather at the end of the fiscal year, saw a 54 per cent growth in the mop up in the April to December period at Rs 4.59 lakh crore.

Experts, however, pointed at the healthy exports trend and cost-cutting by companies to explain the surge in direct taxes.

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