High mop-up despite a 65% jump in refunds
The Centre’s direct tax collections (post-refunds) grew by a robust 30% on year till September 8 of the current financial year even as refunds rose sharply by 65% during the period.
Both personal income tax (PIT) and corporate income tax (CIT) performed much better than anticipated, thanks to higher compliance and a favourable base effect.
“Direct Tax collection, net of refunds, stands at Rs 5.29 trillion which is 30.17 % higher than the net collections for the corresponding period of last year. This collection is 37.24% of the total Budget Estimates of direct taxes for FY23,” the Central Board of Direct Taxes (CBDT) said in a statement.
The Centre’s direct tax collections are expected to exceed the FY23 Budget target of Rs 14.2 trillion by a substantial amount, as the target for the year is at par with actual receipts of last fiscal.
After adjustment of refunds, the growth in CIT collections was 32.73% and that in PIT collections (including STT) is 28.32% till September 8 of FY23. Refunds amounting to Rs 1.19 trillion have been issued from April 1, 2022, to September 8, 2022, which are 65.29% higher than refunds issued during the same period in the preceding year.
Gross direct tax collections (before refunds) grew by 35.5% on year to Rs 6.48 trillion up to September 8 of the current financial year.
Rohinton Sidhwa, partner, Deloitte India: “As the economy continues to recover from the Covid downturn, the efforts at nudging tax payers to better compliance through a combination of technology intervention and data reporting are paying off, and tax collections continue on their upward trajectory. It’s expected that a clearer picture will be available by the calendar year end as filings come in for corporate tax returns and audit examinations also complete.”
Amit Singhania, Partner, Shardul Amarchand Mangaldas & Co. “The increase in direct taxes collections is encouraging and is indicative of the fact of robust economic growth. The growth rate of Corporate Income Tax indicates buoyancy in the profitability of India Inc.”