Mumbai: The fiscal year ended March 31 saw income tax and corporate tax collections of Rs 9.45 lakh crore, which were 5% higher than the revised target but 10% lower than the previous year’s direct tax collections of the tax department’s head.
In the budget for 2020-21, which was presented on February 1 of last year, the government expected revenue of Rs 13.19 lakh crore from direct taxes. Before the pandemic struck and after it wreaked havoc on the economy, the aim – dubbed the revised budget estimate – was cut to Rs 9.05 lakh crore.
P C Mody, Chairman of the Central Board of Direct Taxes (CBDT), said his department surpassed the revised estimate (RE) despite granting large refunds in the 2020-21 fiscal year (April 2020 to March 2021).
In the 2019-20 fiscal year, direct tax receipts, including income tax and corporate tax, totalled Rs 10.49 lakh crore. According to preliminary figures released on Friday, the collection in 2020-21 is estimated to be Rs 9.45 lakh crore. The current fiscal year’s target has been set at Rs 11.08 lakh crore.
The collection for the just-ended fiscal year 2020-21 was 5% higher than the RE but 10% lower than the mop-up in 2019-20.
The net corporate tax collection for the fiscal year 2020-21 was Rs 4.57 lakh crore, while the net personal income tax collection was Rs 4.71 lakh crore. Securities transaction tax brought in Rs 16,927 crore (STT).
In the previous fiscal year, the gross direct tax revenue was Rs 12.06 lakh crore. The net mop-up was Rs 9.45 lakh crore after refunds of Rs 2.61 lakh crore were deducted. The number of refunds issued has increased by 42 per cent.
According to a finance ministry release, despite the inherent challenges posed by the COVID-19 pandemic on the economy, net direct tax collections for FY 2020-21 have increased.
According to Mody, many steps have been taken to reduce enforcement burdens and improve taxpayer facilities, who added that the tax collection for the previous fiscal year reflected this.
He hoped that the same attitude toward tax collection would be maintained in the current fiscal year.
Apart from the revival of economic activity amid the tough times, a transparent and equitable taxation mechanism gives us the hope that we will reach our current targets as well, Mody added.
Direct tax collections tend to have contracted by a modest 3.5 per cent in March 2021, according to ICRA Chief Economist Aditi Nayar, indicating the back-end release of refunds.
Regardless, we expect the fiscal deficit to be limited to Rs. 17.0-17.2 trillion for the fiscal year just ended, with direct and indirect tax receipts exceeding the Revised Estimates. According to the Budget Estimates, with direct tax cuts limited to 10% in FY2021, the growth target for FY2022 is now around 17%, just slightly higher than expected nominal GDP growth, she added.
