Advance Tax Collections Grow 90% in Q3 of FY22

Advance tax collections in the third quarter of the fiscal year almost doubled from the year-earlier period, underscoring hopes of a sustained economic recovery amid the threat from the Omicron Covid-19 variant.

The advance tax mops up in the December quarter was Rs94107 crore, up 90% from Rs49536 crore in the same period last year, accounting to people with Knowledge of the preliminary data. Corporate advance tax accounted for Rs54445 crore, up 75% from Rs31107 crore. Personal income tax rose 115% to Rs39662 crore.

“The said amount is expected to increase further as information is wait from banks,” a government source told ET. Cumulative advance tax collections in the April-December period of the fiscal year stood at Rs3.45 lakh crore on December 16, up 65.5% from Rs2.08 lakh crore in the year earlier. Corporation tax accounted for Rs2.50 lakh crore, up 55% from Rs1.60 lakh crore. Personal income tax rose 98% to Rs97719 crore from Rs47865 crore.

“Some of the marquee companies either skipped the payout or paid relatively less in the first two quarters,” said a government official.

However, the third quarter has so far been good for most sectors barring a few like automobiles due to the chip shortage, so collections have further improved,” the official said.

Personal Income tax collections have been showing an uptick since the beginning of the fiscal, the person said.

This mainly due to a rise in the income of mid-level to senior management executives in certain sector such as information technology and pharmaceuticals. Also, promoters of unicorns and other startups have been done well during the years, he said.

Advance tax is paid as and when money is earned on four installments rather than at the end of the fiscal year. It is considered an indicator of economic sentiment.

The first installment, or 15% of advance tax is to be paid by June 15, the second by September 15 (30%), the third by December 15 (30%), and the rest by March 15.

Direct tax collection net of refunds grew 67.2% up to December 16 to Rs8.29 lakh crore from Rs4.95 lakh crore in the same period last year. Total refunds issued however fell 7.5% to Rs1.35 lakh crore from Rs1.46 lakh crore a year ago.

Gross collection at Rs9.64 lakh crore were 50% higher than last year. In FY21, gross collections during the period amounted to Rs6.41 lakh crore. The target for the current fiscal year us Rs11.08 lakh crore.

The central Board of Direct Tax (CBDT) on Thursday said that nearly 35.9 million income tax returns have been filed on the e-filing portal. The number of ITRs filed per day has crossed 600000 and is increasing as the extended due date of December 31 approaches, it said.

Direct taxes may exceed budgetary estimates for the fiscal as companies have so far been cautions about expectations over Covid concerns. That may change with rising vaccination coverage and a muted Omicron impact.

Experts expect that the budgeted tax collections target, both direct and indirect, of Rs22.2 lakh crore for the current fiscal year will be surpassed.

“With the next direct tax collection till December-mid closing in over Rs8 lakh crore and average monthly goods and services taxes (GST) mop up likely to be around Rs1.15 lakh crore, the government kitty is likely to surpass budget estimates financial year,” an economist said.

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