Net direct tax collections up 18% in AprilDecember
TAXING TIMES Gross tax collections before adjusting for refunds grew 12.6% NEWDELHI:
Direct tax collections grew by more than 18% in the first nine months of this fiscal to two-third of the budgeted collections, in a breather for the government struggling to meet the fiscal deficit target.
Government revenues have been under pressure, led by a shortfall in revenues from the goods and services tax (GST), prompting the government to announce additional borrowings of ₹50,000 crore in December through government securities to fund spending in key sectors of the economy.
Net direct tax collections for the nine months, ending December, rose 18.2% to ₹6.56 trillion. These numbers were 67% of the budgeted direct tax collections of ₹9.8 trillion for the full year, the tax department said in a statement. This means the remaining one-third of tax collections have to come in the last quarter of 2017-18, which is achievable going by previous years’ trends.
In the year ago period, direct tax collections up to December were 65.3% of the budget estimates and the government barely managed to meet the budget estimates at the end of the year.
Gross tax collections before adjusting for refunds grew 12.6% to ₹7.6 trillion. Refunds in the period amounted to ₹1.12 trillion. Advance tax collections grew by 12.7% to ₹3.18 trillion led by good growth in personal advance income tax collections. Personal advance income tax collections grew by 21.6%, while corporate advance tax collections grew by 10.9%, the statement added.
A good growth in direct tax
GOVT REVENUES HAVE BEEN UNDER PRESSURE, LED BY A SHORTFALL IN REVENUES FROM GST
collections will help ease the pressure on the fisc. India is targeting to curb its fiscal deficit to 3.2% of GDP in 2017-18. However, data released so far suggests this will be challenging.
Data released by the controller general of accounts showed that the government exhausted 112% of its ₹ 5.5 trillion full-year fiscal deficit by November-end due to lower than expected reve- nue collections and higher expenditure.
As of November end, while expenditure was nearly 69% of the budget estimates, revenue collections were only 53% of the estimates.
Tax evasion and cut in tax rates on many items has seen collections from goods and services tax falling progressively since the tax was implemented in July. In December, GST revenues (for the month of November) were at ₹80,808 crore falling from ₹ 94,063 crore collected in August.
As of 9 January, the government has managed to raise around ₹53,900 crore, against the budgeted ₹72,000 crore through disinvestment, according to information available from the finance ministry.
“There is going to be a shortfall in indirect tax targets but they may manage to meet the direct tax collections. However, the growth in direct tax collections may not be enough to compensate for the shortfall in GST collections,” said Madan Sabnavis, chief economist at Care ratings.
“The fact that the government is going to borrow an additional ₹50,000 crore indicates that the fiscal deficit target is unlikely to be met,” he said.