Direct tax collections increase 10.7% during April-february

Indirect tax mop-up stands at `7.72 lakh crore, 22.2% more than last year

SUBDUED CORPORATE TAX COLLECTIONS

DIRECT TAX collections rose 10.7 per cent to Rs 6.17 lakh crore in April-february, while indirect tax mop-up stood at Rs 7.72 lakh crore, up 22.2 per cent from last year.

With only one month remaining for the financial year of 2016-17, the government will need to mop up around 27 per cent of the total direct tax target or Rs 2.3 lakh crore in the last month of March to achieve the total direct tax target of Rs 8.47 lakh crore.

The slowdown in direct tax mop-up has been due to higher refunds and subdued corporate tax collections. Gross corporate income tax collection grew at 11.9 per cent during Aprilfebruary. After adjusting for refunds, however, the net growth in corporate income tax collections was only 2.6 per cent.

Personal income tax collections for the same period grew 20.8 per cent over last year, while the net collections were recorded at 19.5 per cent.

Refunds amounting to over Rs 1.48 lakh crore have been issued during April-february, up 40.2 per cent from last year.

“The low growth of corporate income tax net of refunds continues to pose a concern of a shortfall relative to the revised estimate for FY2017,” ICRA’S principal economist Aditi Nayar said. Officials, however, said they are hopeful of meeting the revised tax targets owing to collections from the ongoing Pradhan Mantri Garib Kalyan Yojana.

Net indirect tax collections also registered a slowdown in February compared with last month, when they had grown 16.9 per cent year-on-year. Excise duty collections registered a sharp decline in collections to 7.4 per cent in February from 26.3 per cent in January 2017. During April-february, the excise duty collections registered a growth of 36.2 per cent at Rs 3.45 lakh crore as against 40.5 per cent growth in April-january.

Service tax collections in April-february recorded an increase of 20.8 per cent at Rs 2.21 lakh crore, while customs mopup stood at Rs 2.05 lakh crore at a growth of 5.2 per cent. For February, customs collections grew at 10.9 per cent, while service tax collections rose 7.6 per cent as against growth rates of 10.1 per cent and 9.4 per cent growth rates in January, respectively.

“The continued moderation in the pace of service tax growth in the recent months, suggests that discretionary spending is being curtailed. The revised estimates for FY2017 for indirect tax collections of the government are likely to be achieved,” Nayar said.