Revenue growth belies claims of economic slow-down: Jaitley
10 January 2017
A double-digit growth in tax revenue collection between April and December 2016 with direct tax collections increasing 12.01 per cent and indirect tax mop-up growing 25 per cent, belies any major impact of demonetisation on the economy, says finance minister Arun Jaitley.
In fact, Jaitley said, collection of value added tax had also risen for most states, which renders claims of an economic slow-down baseless. "All stories about job losses or businesses suffering losses are anecdotal. This data is real and not an estimate".
Jaitley's assertion comes against the backdrop of the All India Manufacturers Organisation (AIMO) warning that demonetisation could crimp manufacturing activity.
Former prime minister Manmohan Singh had predicted a 2 per cent slide in the growth rate, Pronab Sen, former chairman of the National Statistical Commission, had forecast a 1 per cent dip in growth.
The advance estimates of GDP released by CSO last week, however, projected economic growth to be around 7.1 per cent, down from the 7.6 per cent last fiscal but above the lows predicted by experts.
Tax collection figures for the period April -December 2016 show a positive trend as collection of direct taxes grow 12.01 per cent and indirect taxes collections grow 25 per cent over the corresponding period last year, ie, April-December 2015.
Direct tax and indirect tax collection figures for the period April 2016 to December 2016 have shown a positive trend as direct taxes grew 12.01 per cent and indirect taxes grew 25 per cent over the corresponding period last year.
The figures for direct tax collections up to December 2016 show that net collections stood at Rs5,53,00 crore, which is 12.01 per cent more than the net collection for the corresponding period last year. This is 65.3 per cent of the total budget estimates of direct taxes for F.Y 2016-17.
Corporate income tax collections grew 10.7 per cent while personal income tax collections rose 21.7 per cent year-on-year in April-December 2016-17. However, after adjusting for refunds, the net growth in corporate tax collections is 4.4 per cent while that of personal income tax is 24.6 per cent.
Refunds amounting to Rs1,26,371 crore have been issued during April-December 2016, which is 30.5 per cent higher than the refunds issued during the corresponding period last year.
After accounting for the third installment of advance tax received in December 2016, the collections under advance tax stand at Rs2,82,000 crore, which is 14.4 per cent higher than the figures for the corresponding period of last year. CIT advance tax is growing at 10.6 per cent while personal income tax advance collections have recorded a growth of 38.2 per cent.
Collection of indirect taxes, including central excise, service tax and customs up to December 2016 show that net revenue collections stood at Rs6,30,000 crore, which is 25 per cent more than the net collections for the corresponding period last year. Till December 2016, about 81 per cent of the budget estimates of indirect taxes for financial year 2016-17 has been achieved.
As regards central excise, net tax collections stood at Rs2,79,000 crore during April-December 2016 compared to Rs1,95,000 crore during the corresponding period in the previous financial year - a growth of 43 per cent year-on-year.
Net tax collections on account of service tax during April-December 2016 stood at Rs1,83,000 crore compared to Rs1,48,000 crore during the corresponding period of the previous financial year, thereby showing a growth of 23.9 per cent.
Net tax collections on account of customs during April-December 2016 stood at Rs1,67,000 crore compared to Rs1,60,000 crore during the same period in the previous financial year, thereby recording a growth of 4.1 per cent
During December 2016, net indirect tax collections (with ARM) grew at the rate of 14.2 per cent compared to corresponding month last year. The growth rate in net collection for customs, central excise and service tax was (-) 6.3 per cent, 31.6 per cent and 12.4 per cent, respectively, during December 2016, compared to the corresponding month last year. The de-growth in customs collections appear to be on account of a decline of gold imports by about 46 per cent (in volume terms) in December 2016 over December 2015.
Jaitley said data showed that indirect tax collection had moved up significantly during the nine-month period.
"Since there has been a considerable debate in the public space as to the impact of the currency squeeze in the months of November and December, the data of these two months become relevant," Jaitley said.
Jaitley said VAT collections in most states have shown an increase and they also received taxes in the old currency in November. "In my opinion, all well administered states have seen a rise in VAT collection even in November."
On the divergence in GDP and tax collection figures, Jaitley said: "We will only comment on final figures (of GDP). Today we only have advance estimates presumption. Tax collection data are real, it is not a presumption."