In FY 2024, Direct Tax Surge Propels Government's Tax Revenue Beyond Budget Projections

20 Jan 2024 , 12:39 PM

As per CareEdge, Government tax revenue collections for the fiscal year 2024 have experienced a notable boost, primarily fueled by the robust growth in direct tax collections. According to data released by the Comptroller and Auditor General (CAG) covering the April-November period, direct tax collections have exhibited an impressive year-on-year growth rate of 24.8%, surpassing the full-year budgeted growth target of 10.5%.

In contrast, gross indirect tax collections demonstrated a more moderate growth of 5.1% year-on-year during the same period, falling short of the full-year budgeted growth rate of 10.5%. The slowdown in external trade and the decline in commodity prices have notably impacted custom collections, resulting in nearly stagnant growth at 0.3% year-on-year in the April-November period.

Excise duty collections are expected to contract for the entire fiscal year, influenced by the excise duty cut on petrol and diesel announced in the previous fiscal year, along with a reduction in special additional excise duty (SAED) on crude oil, reported CareEgde.

Even Goods and Services Tax (GST) collections in the April-November period grew by 10.3%, slightly below the budgeted growth rate of 12.1% for the entire year. Despite this, driven by the strong performance of direct taxes, the anticipation is that gross tax collection will witness a rise of 11.9%, surpassing the budgeted growth of 10.4% and exceeding the budgeted amount by approximately Rs 450 billion.

While indirect taxes are expected to fall short by approximately Rs 490 billion in FY24 from the budgeted amount, direct tax collections are projected to surpass the budgeted value by a substantial Rs 940 billion, reflecting the robust performance of direct tax components.