Better compliance, economic recovery boost tax collections
NEW DELHI: The central government’s total direct and indirect tax collections after refunds jumped 34% to ₹27.07 lakh crore in FY22 from a year ago, aided by rapid economic recovery and better tax compliance, revenue secretary Tarun Bajaj said on Friday.
The bonanza comes in handy for the government at a time stake sale in state-run enterprises did not go as planned in FY22, and the government had to incur additional spending on capital infusion in public sector financial institutions and on fertilizer subsidy amid surging commodity prices.
While net direct tax receipts after refunds comprising corporate tax collections and personal income tax receipts jumped 49% in FY22 to ₹14.1 lakh crore from the actual collection a year ago, indirect taxes saw a 20% improvement in the year to ₹12.9 lakh crore. Mint reported on Wednesday that direct tax collections for FY22 nearly touched ₹14 lakh crore.
Data made available by the finance ministry and budget documents showed that the ₹14.1 lakh crore net direct tax receipts after refunds were a huge jump from ₹9.45 lakh crore in FY21. In FY22, the income tax department gave refunds of ₹2.24 lakh crore, an official statement said. “During the last two years, the effort has been to clear backlog of refunds to infuse liquidity into the hands of businesses,” said the statement.
On the indirect tax side, the Centre’s GST collection increased from ₹4.6 lakh crore in FY21 to ₹5.9 lakh crore in FY22. The average monthly gross GST revenue in FY22 has been ₹1.23 lakh crore compared to ₹94,734 crore in FY21 and ₹1.01 lakh crore in 2019-20, the statement said.
Bajaj, however, did not give any indication on how the revenue performance will impinge on the tax policy.
The government’s stated policy is to reduce direct tax rates when revenue collections grow. To a question on whether the government will look into it, Bajaj said one needs to have patience on this matter, given that tax rate reductions need legislative changes.
“Premature for me to say that good direct tax collections mean a correction in tax rates,” he said. He also did not comment on whether indirect tax collections growing faster than GDP growth weakened the case for GST rate increases.
“On GST rate rationalization, we will have to wait for the Basavaraj Bommai committee,” he said.