Hindustan Times ST (Mumbai) - Live
Direct tax mop-up exceeds FY21 RE
Direct taxes, paired with the robust trend in GST, signal healthy economic recovery
NEW DELHI: The Union government’s net direct tax collections for the year 2020-21 surpassed the revised estimate (RE) by 4.42% at ₹9.45 lakh crore, the finance ministry said on Friday, disclosing figures that appear in sync with a recovery in goods and services tax (GST) receipts.
Direct taxes include corporate and individual income tax, and its recovery, paired with the robust trend in GST, signals a healthy recovery after the Covid-19 pandemic and subsequent lockdowns took a toll on the economy in the early part of the last financial year.
“According to the provisional data, the net direct tax collection for 2020-21 has shown an upswing, despite the inherent challenges faced by the economy due to the Covid-19 pandemic and the lockdown,” a finance ministry spokesperson said.
Due to the pandemic and subsequent nationwide lockdown, India’s economy shrank by 24.4% in the first quarter of 2020-21 and 7.3% in the next quarter, before entering growth territory and expanding by 0.4% in the three months ended December 31.
The net direct tax collections include corporation tax at ₹4.57 lakh crore and ₹4.88 lakh crore personal income tax, including security transaction tax (STT), the finance ministry said in a statement.
Initially, the government had made a budget estimate (BE) of ₹13.19 lakh crore direct tax receipts in 2020-21, which included ₹6.81 lakh crore corporate tax and ₹6.38 lakh crore personal income tax.
The Centre, however, lowered the projection by about 31% due to the 68-day nationwide hard lockdown that began on
March 25, 2020. The RE projected receipts of ₹9.05 lakh crore in direct tax mop-up—₹4.46 lakh crore as corporate tax and ₹4.59 lakh crore as personal income tax.
The official mentioned above said tax collections in 2020-21 were robust despite an over 42% jump in refunds at ₹2.61 lakh crore, compared to ₹1.83 lakh crore refunded in 2019-20.
“Despite an extremely challenging year, the advance tax collections for FY21 stand at ₹4.95 lakh crore, which shows a growth of approximately 6.7% over the advance tax collections of the immediately preceding financial year of ₹4.64 lakh crore,” the statement said.
Revenue secretary Tarun Bajaj said last week that the direct tax collections in February and March 2021 were good due to rapid economic recovery. “There has been an improvement in corporate tax and personal income tax collections. Figures are coming in still, but we should be crossing the RE figure of ₹9.05 lakh crore... This shows the economy is doing well,” he said in an interview
Awith Hindustan Times, on April 2.
According to the finance ministry, the gross collection of direct taxes before adjusting for refunds in the financial year ended March 31, 2021, was ₹12.06 lakh crore.
The gross collection includes corporate tax at ₹6.31 lakh crore and personal income tax (including STT) at ₹5.75 lakh crore.
Total collection of advance tax in the year is ₹4.95 lakh crore, tax deducted at source (TDS) at ₹5.45 lakh crore, selfassessment tax at ₹1.07 lakh crore, regular assessment tax at ₹42,372 crore, dividend distribution tax at ₹13,237 crore, and tax under other minor heads at ₹2,612 crore, it said.
Samir Kanabar, tax partner at consultancy firm EY India,
published said, “Strong campaign for ‘Vivad se Vishwas’ scheme, use of technology/digitisation and widening of tax base coupled by tax collected at source has contributed to higher tax collections. Also, such higher tax collections in the pandemic year corresponds to a rebound in the economy and is in sync with higher GST collections.”
GST receipts in March were at an all-time high at ₹1,23,902 crore with a robust 27% annualised growth and a 9.5% jump over the revenue of last month. GST collections exceeded the ₹1 lakh crore benchmark for the sixth consecutive month and posted positive growth for the seventh month in a row since September this year after having contracted for six straight months since March 2020 because of the pandemic.