Net personal income tax collections grew at a faster rate of 20.7% compared to corporate income tax flows, which grew by 13.62% in the first eleven months and the first ten days of this financial year. File | Photo credit: The Hindu

India’s net direct tax revenue growth, which stood at around 17% for this year in early March, is expected to moderate to 15% for the whole of the 2022-23 financial year, a senior government official has said. Ministry of Finance. The Hindu.

The government’s net revenue from direct taxes had increased by around 49% in 2021-22 to almost ₹14.09 lakh crore. The strong growth was attributable to the gradual recovery of the economy from the COVID-19 pandemic-related lockdowns that had hit economic activity the previous year.

Growth slowdown

Direct tax inflows, which include corporation tax, personal income tax and securities transaction tax (STT), had increased by almost 20% by mid-December 2022 , but each successive month has seen a slight slowdown in the rate of growth.

As of February 10, the growth rate stood at 18.4% and then increased to 16.8% on March 10, when the total net amount of direct tax pool amounted to ₹13.73 lakh crore. This amount represented 96.7% of the budget estimates for 2022-2023 and 83.2% of the revised estimates for direct taxes.

“We expect to end the year with growth of around 15% on the net direct tax front,” the official said, adding that part of the reason for the higher growth rates recorded earlier this year was that the due dates for taxpayers to pay their contributions had not been relaxed this year unlike 2021-22, where the second wave of the pandemic required some relaxation.

Faster refunds

“In addition, the rate of repayments has accelerated this year and some of these repayments may also relate to last year. Thirdly, the growth rate of the economy as well as the inflation rate fell in the second half of the year, compared to the first half of the year”, underlined the person in charge.

Refunds granted to taxpayers this year stood at ₹2.95 lakh crore as of March 10, nearly 60% more than refunds made in the same period of the previous year. Net personal income tax collections grew at a faster rate of 20.7% compared to corporate income tax flows, which grew by 13.62% in the first eleven months and the first ten days of this financial year.

“Provisional figures for direct tax collections through March 10, 2023 continue to show steady growth,” the finance ministry said in a statement on March 11. than the corresponding period of 2021-22.

‘Encouraging’

“Gross tax revenue has been encouraging this year despite revenue losses due to reductions in customs and excise duties,” said Rajani Sinha, chief economist at CareEdge Ratings. Although she did not commit to the outlook for net direct tax growth, she said it was possible that gross direct tax revenue could reach or slightly exceed the revised target of ₹16.5 lakh crore. for the year.

“Upbeat tax revenues could help keep the government’s budget deficit target in check,” Ms Sinha said. CareEdge forecast gross tax revenue for 2022-23 at ₹31.1 lakh crore, slightly higher than the Centre’s revised estimate of ₹30.4 lakh crore.