Tax collection beats expectation, up 18% IN THE BAG

Government gets ~17.1 lakh crore in its kitty

Tax collections at ~17.1 lakh crore for 2016-17 exceeded the Revised Estimates (RE) of ~16.97 lakh crore by 0.8 per cent, official figures showed on Tuesday. Corporate tax and excise duty collections fell short of RE, which implies that industrial recovery could be prolonged. The tax collection figures in 2016-17 were 18 per cent higher than the previous fiscal year’s figures and the highest growth in the past six years, according to Revenue Secretary Hasmukh Adhia.

With these tax numbers coupled with a spurt in disinvestment proceeds in March, the Centre will be able to rein in its fiscal deficit at 3.5 per cent of the country’s gross domestic product (GDP), as budgeted despite figures till February exceeding the targeted 13 per cent, said Devendra Pant, chief economist, India Ratings. Direct tax collections were ~8.47 lakh crore, same as in the RE, and 14.2 per cent higher than in the previous year.

Indirect tax collections were ~8.63 lakh crore, higher than RE ~8.5 lakh crore, and 22 per cent higher than in 2015-16.

Corporate tax collections grew 6.7 per cent, year-on-year (YoY), lower than the projected 8.97 per cent, largely because of tax refunds. If refunds are included, corporate tax Actual collection of taxes has been more than the Revised Estimates (RE) collections are 13.1 per cent higher than in 2015-16.

Income tax (I-T) collections have increased 21 per cent, YoY. Refunds of ~1.62 lakh crore were issued, 32.6 per cent more than in 2015-16. Gross personal I-T collections were up 18.4 per cent, YoY.

The Pradhan Mantri Garib Kalyan Yojana, a scheme to boost tax collection announced after demonetisation, did not draw an encouraging response. Sources said collections in this scheme could be lower than ~3,000 crore. Prime Minister Narendra Modi had announced the demonetisation of the old ~500 and ~1,000 notes on November 8 last year.

Excise duty collections were ~3.83 lakh crore, slightly lower than RE of ~3.87 lakh crore. Growth in collection slowed down in March after increasing 36.2 per cent, YoY, during April-February 2016-17.

Service tax collections at ~2.54 lakh crore were higher than the RE of ~2.47 lakh crore, growing 20.2 per cent from the previous year’s ~2.1 lakh crore. Cesses on service tax were raised from June 2016. Customs duty yielded ~2.26 lakh crore, higher than the RE of ~2.17 lakh crore. Collections were 7.4 per cent higher than ~2.10 lakh crore in the previous fiscal year.