Net direct tax mop-up zooms 100% till June 15
Dilasha Seth |
Last Updated at June 17, 2021 01:31 IST
The advance collection of corporation tax and personal income tax in the first quarter grew 146 per cent over last year, while overall net direct taxes doubled during this period compared to 2020, reigniting hopes of sustained economic recovery despite the disruption caused by the second wave of the pandemic.
Collection in the first quarter grew to Rs 28,780 crore against Rs 11,714 crore, the preliminary data released by the Central Board of Direct Taxes showed on Wednesday.
Of the advance tax, corporation tax accounted for Rs 18,358 crore and personal income tax Rs 10,422 crore.
“This amount is expected to increase as further information is received from banks,” the Ministry of Finance said in a statement.
Advance tax is paid as and when the money is earned in four instalments rather than at the end of the fiscal year. It is considered an indication of economic sentiment. The first instalment or 15 per cent of the annual tax is to be paid by June 15, the second by September 15 (30 per cent), the third by December 15 (30 per cent), and the rest by March 15.
Direct tax collection, net of refunds, grew by 100.4 per cent till June 15 to Rs 1.85 trillion compared to Rs 92,000 crore in the same period last year. Corporation tax stood at Rs 74,000 crore, net of refunds, and personal income tax including security transaction tax stood at Rs 1.11 trillion.
Aditi Nayar, chief economist, ICRA Ratings, said the jump in direct tax collection in Q1 FY22 relative to Q1 FY21 reflected “healthy exports and a continuation of various industrial and construction activities, given the lower stringency of the staggered regional lockdowns in 2021 vs. the nationwide lockdown in 2020”.
“This supports our expectation that GDP will record a double-digit expansion in Q1 FY2022,” said Nayar.
Gross collection at Rs 2.16 trillion is 57 per cent higher than last year. Refunds are down at Rs 30,731 crore compared to Rs 45,063 crore last year.
The Budget has estimated revenues from direct taxes at Rs 11.08 trillion, which will need a growth rate of 17 per cent over the 2020-21 actuals. Last year, the direct tax mop-up at Rs 9.47 trillion was 9.7 per cent lower than the previous year due to the impact of the pandemic, but exceeded the revised estimates, which stood at Rs 9.05 trillion.
Tax officials have attributed it partly to payments from the Vivad se Vishwad Direct Tax Dispute Resolution Scheme and lower issuance of refunds, while others have said it is owing to increased compliance and enforcement due to the sharing of the goods and services tax data with the Central Board of Direct Taxes.
Mumbai saw collection grow by nearly 96 per cent to Rs 55000 crore from Rs 28000 crore last year during this period. Delhi has seen a 77 per cent jump to Rs 23,000 crore from Rs 13,000 crore last year. Chennai and Pune have posted an expansion of 100 per cent and 167 per cent, respectively, to Rs 12,000 crore each.
The CBDT had received Rs 54,005 crore from the Vivad se Vishwas Scheme by March and the government was expecting another Rs 20,000 crore by April 30. However, the date of payments was extended to June 30 in a notification last month in view of the challenges arising due to the second Covid-19 wave.
Sudhir Kapadia, national tax leader, EY India, said: “It is evident from the tremendous growth in advance tax payments this fiscal year over last year that India Inc has factored in a full cycle of economic recovery after the second wave of Covid. This has no doubt been helped by a better understanding of the economic impact and accelerating pace of vaccinations. At the same time last year, there was far greater uncertainty about the true economic impact of the lockdown and also no vaccine discovery in sight.”
GST collection moderated to an eight-month low in May at Rs 1.02 trillion.
India’s merchandise exports in May grew 67.39 per cent at $32.21 billion over the same month last year and by 195.72 per cent in April at $30.63 billion.
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