Budget Expectations: Direct tax revenues likely to increase by more than the nominal growth rate of GDP

18 Jan 2023 , 03:19 PM

FY 24 Budget is likely to project a growth in direct tax revenues, that is more than the forecasted nominal growth rate of GDP. According to an estimate by credit rating agency ICRA, direct tax revenue growth that will be factored in the budget of FY 24 will be 11%.

Direct taxes are made up of income tax and corporate tax. Direct tax collection in FY 24 is likely to exceed the rate of nominal growth rate of GDP because of more efficient tax collection by the government. Efficiency of tax collection has improved significantly in FY 23. More people are paying taxes and filing tax returns. 

The level of corporate tax collection in the year will be affected by the impact of economic slowdown on the profitability of Indian companies. The economic situation is very likely to exacerbate in the year. This will happen both at the domestic level and at the global level.