Direct tax mop-up tops RE at ₹14L cr in FY22

BENGALURU: Direct tax collections touched nearly ₹14 lakh crore in the just-ended fiscal, exceeding the revised estimates (RE) by ₹1.5 lakh crore and nearly hitting the estimates for the next fiscal, an unprecedented level of mop-up that gives the government more spending options amid a high deficit and galloping prices.

According to the latest figures compiled by the central board of direct taxes (CBDT), the mop-up for FY22 is only about ₹20,000 crore short of the 2022-23 budget estimates (BE), which means direct tax collections will need to grow by only 1.7% to meet this year’s target.

Corporate tax collections for FY22 has already reached the budget target for FY23, while income tax collections exceeded the BE for FY22 by 33,000 crore. Securities transaction tax mop-up stood at ₹23,000 crore, topping the revised estimate of ₹20,000 crore.

Mumbai accounted for a third of the total mop up at ₹4.48 lakh crore, a 50% increase from the previous year, followed by Bengaluru, which posted a 43% growth. Delhi, Chennai and Pune recorded increases in direct tax collections of 38%, 48% and 69% respectively. In the budget for 2022-23, the government assumed direct tax revenue growth at 12% to ₹14.2 lakh crore. Assuming the same rate of growth on the actuals for 2021-22, net direct tax collection is set to touch ₹15.6 lakh crore.

Direct tax revenue collections for 2022-23 may provide the government with an additional spending buffer in the current fiscal in case the spike in global fuel and commodity prices led by the Russia-ukraine conflict disrupts economic demand.

“The better-than-expected tax collections can be attributed to the revival in corporate earnings. The collections exceeding the revised estimates are in line with expectations as some room was kept to account for contingencies,“said a government official requesting anonymity.

Retail inflation has breached RBI’S upper tolerance limit for two straight months and touched 6.07% in February, while the fiscal deficit target for FY22 is 6.9% of GDP.

Direct tax collections, net of refunds, comprising corporate tax and personal income tax hit ₹13.95 lakh crore as of March 31, about 49% higher than 2020-21 and 10.3% more than the revised estimate for 2021-22 announced in the budget. Gross direct tax collections (before refunds) stood at ₹16.06 lakh crore, up 36% from ₹11.8 lakh crore in 2020-21. Refunds declined 15% from last year at ₹2.11 lakh crore.

Corporation tax mop up recorded a 57% growth last fiscal to ₹7.19 lakh crore. Personal income tax mop-up grew by 44% to Rs 6.48 lakh crore in FY22.