Direct tax collection up in April-September, but still short of target
19 September 2019
Total revenue collection by way of direct tax receipts is reported to have increased by 5.7 per cent to Rs5,50,000 crore in the April-September period of the current financial year, against Rs5,25,000 crore during April-September 2018-19.
Net collection (after deducting refunds) were up over 7 per cent at about Rs4,50,000 crore against Rs4,25,000 crore in April-September last fiscal, bringing some respite to the government, which is fighting revenue shortfalls.
Direct tax collection for the first half of the fiscal year, however, is still far short of the targeted 16 per cent growth rate for the full year.
Advance tax collection during April-September 2019-20 stood at Rs2,20,000 crore, against Rs2,05,000 crore in the same period of the previous fiscal.
The government has set a direct tax collection target of Rs13,35,000 crore for this fiscal year, which is 16 per cent higher than the budget estimate of Rs11,50,000 crore and 11.25 per cent higher than the revised estimate of Rs12,00,000 crore. To meet the target, tax collection must reach Rs7,85,000 crore – growing at a rate of 20 per cent - in the remaining six months of the financial year.
With the direct tax collection target unlikely to be met and GST collections too muted, the government’s revenue target poses a challenge, given the slowdown across various sectors of the economy.
As things stand, the government may have to rework its deficit target of 3.3 per cent of GDP.
Of every rupee coming into the coffers, 68 paise will be from direct and indirect taxes. Corporation tax, the single-largest source, contributes 21 paise; income tax will yield 16 paise; and GST collections 19 paise.
The government is in a strange situation with rising expenditure and falling tax revenue. Finance minister Nirmala Sitharaman is holding meetings with stakeholders from various sectors of the economy who are demanding tax sops and fiscal incentives.