Between April and July, direct tax collection increases by 40%

16 Aug 2022 , 07:33 AM

According to official statistics, between April and July, the central government collected more than a third of the direct taxes due for this fiscal year, with personal tax collections outpacing corporation tax mop-up due to stricter enforcement and compliance procedures.

In the first four months of FY23, total direct tax revenues, net of refunds, increased by 40% to Rs 5 trillion, or around 35% of the target of Rs14.2 trillion for the entire fiscal year, according to the source. This includes a corporation and personal income tax collections.

Direct tax refunds, meanwhile, rose by 38% to Rs67,000 crore. Strong direct tax collections would assist the government makes up the difference in indirect taxes, as the federal government has reduced taxes on gasoline and diesel to rein in soaring rates brought on by a surge in global oil prices.

While corporation tax receipts were at Rs45,000 crore, personal income tax receipts increased by 52% year over year to Rs 2.67 trillion. Government authorities credited increased use of technology, such as the Annual Information Statement, for tighter enforcement and compliance, which led to an increase in direct tax revenues (AIS).

The AIS, which was released last year, offers thorough details to taxpayers on their financial activities. Making it simpler for taxpayers to file their taxes is the goal of the new AIS. The collection of personal income tax was 38% of the FY23 budget target of Rs7 trillion, while self-assessment tax increased by 275% to Rs43,500 crore during the April—July period. In contrast, corporate tax collections increased by 32% to Rs2.2 trillion from Rs6.73 trillion in personal income tax.