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Direct Tax Kitty Swells in H1, Betters Pre-Covid FY20 Level

The direct tax collection has risen sharply in the first half of the current fiscal, going past the kitty in the pre-pandemic FY20, data released by the government showed, underlining the recovery in the economy.

As of September 22, gross direct tax collections are up 47% year-on-years to Rs 6.45 lakh crores while the net direct taxes have risen higher 74% to Rs. 5.7 lakh crores, the Central Board of Direct Taxes (CBDT) said in a statement Friday.

The net collections are 27% high than Rs4.49 lakh crores in FY20, before the pandemic struck the country, while at the gross level they are up 16.8% from two years ago, “Most sectors including manufacturing, financial including manufacturing, financial intermediation, mining, steel, pharma have shown growth in tax payments over even 2019-20,” revenue secretary Tarun Bajaj told ET.

“We expect the trend to continue going forward in third and fourth quarters.”

The advance tax payments by companies, self-employed and business people were up by 65% to Rs. 2.53 lakh crores, the Central Board of Direct Taxes (CBDT) said in a statement on Friday. Refunds for the period stood at Rs. 75,111 crores.

Indirect tax receipts including customs, central excise and CGST were up 44% in the April-August period from a year ago and 29% over FY20.

In the Covid impacted FY21, net direct tax collection was Rs 3.27 lakh crores. “Relative to the pre-Covid period is an enthusing signal of the waning impact of the pandemic on Indian macros,” said Aditi Nayar, chief economist at ratings agency ICRA. The direct tax collection has benefitted from the formalization of the Indian economy, which was already underway, but has been accelerated by the pandemic and the goods and services tax (GST), Nayar added.

“The department is working to effectively use data and technology available and reach out to ensure payments were being made,” Bajaj said.

The net direct tax collection of Rs 5.7 lakh crores includes Rs.3.02 lakh crores corporation tax, and Rs. 2.68 lakh crores personal income tax (PIT) including security transaction tax (STT). Gross direct taxes of Rs6.45 lakh crores include advance tax of Rs2.53 lakh crores, tax deducted at source of Rs. 3.19 lakh crores, and self-as-the higher base of the corresponding period of FY21 when the economy had started to recover from the first wave of the pandemic.

ROBUST ADVANCE TAX

The second installment of advance tax was due September 15, by which 45% of the tax liability of a company, business, or self-employed person, needs to be paid up.

The cumulative advance tax collection for Q1 and Q2 of FY22 stand at Rs. 2,53,353 crores against Rs. 1,62,037 crores for the corresponding period FY21 showing a growth of 56%. S-ET

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