Tax collections surge on black money crackdown

The Central government’s gross tax collections grew at its fastest pace in six years by 18% to touch ₹17.10 lakh crore during 2016-17, as the Narendra Modi government cracked down against black money hoarders.

The higher revenue collection comes mainly on account of spurt in excise and income tax collections, the finance ministry said on Tuesday.

The robust revenue collections raise hopes for the government to rein in the fiscal deficit within 3.5% of GDP in 2016-17.

The growth in gross tax collection in 2016-17 was fastest since 2010-11, when it rose 27% after the government hiked excise duties and service tax rates to unwind the fiscal stimulus rolled out during the global financial crisis in 2008 and 2009.

On Tuesday, the finance ministry said: “Indirect tax collections (central excise, service tax and customs) of ₹8.63 lakh crore in FY 2016-17 is about 101.35% achievement of RE 2016-17.”

In his Budget for 2017-18, finance minister Arun Jaitley had revised the tax target to ₹16.97 lakh crore from ₹16.25 lakh crore budgeted in 2016.

“As against the revised estimate, the provisional figure of tax collection is ₹17.10 lakh crore, which is a growth of around 18% compared to last year,” the ministry said.

Indirect tax collections were up 22% at ₹8.63 lakh crore during 2016-17, which was 101.35% of the revised estimates made in the budget. Central excise collections grew 33.9% to ₹3.83 lakh crore during 2016-17, while service tax mop up were 20.2% at ₹. 2.54 lakh crore and customs grew 7.4% to ₹2.26 lakh crore.

“Rise in fuel prices coupled with forced sales by companies during the demonestisation drive pushed up excise collections,” said Soumya Kanti Ghosh, chief economic adviser, SBI.

Direct tax collections grew 14.2% to ₹8.47 lakh crore, which is dot on budget target with corporate tax collections growing 13.1% and income tax revenue up 18.4%, after the Centre netted extra revenues from black money hoarders.

Under the first Income Disclosure Scheme (IDS-I), as many as 64,275 citizens disclosed unaccounted income worth ₹65,250 crore. This yielded about ₹ 15,000 crore last financial in the first two installments in November and March.

Last month, finance ministry officials told HT that tax collected from the second income disclosure scheme launched after demonetisation may touch ₹10,000 crore.

Some analysts expect the collection from IDS-II to touch ₹50,000 crore or more as many black money hoarders were forced to deposit unaccounted cash in banks without realising that taxmen are going to go after them even in the new fiscal.

The revenue receipts from IDS schemes (IDS-I and IDS-II) will be much higher than the Voluntary Disclosure of Income Scheme of 1997, which garnered ₹9,760 crore.