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Gross direct tax collection has grown by 24% YoY to Rs 8.98 trillion YTD in FY23

10 Oct 2022 , 11:48 AM

According to a statement released on Sunday by the finance ministry, the Centre’s gross direct tax collection for FY23 to date (as of October 8) is Rs 8.98 trillion, or 23.8% more than the mop-up during the same period the previous year.

Net tax receipts (after refunds) are now at Rs 7.45 trillion, or 52% of the FY23 Budget Estimate. In contrast to the FY22 total of Rs 14.10 trillion, the Union Budget for FY23 projected a direct tax collection of Rs 14.20 trillion. While collections are still high, they must also be backed by a recovery in corporate investment cycles following Covid, according to Rohinton Sidhwa, the partner at Deloitte India.

For policymakers, tax revenue has been a source of encouragement, and indirect tax revenue has also experienced a significant increase. Due to growing demand, higher rates, and more tax compliance, September’s goods and service tax receipts increased by 26% to Rs 1.47 trillion. For the eighth month, tax revenue from the country continued to exceed Rs 1.4 trillion, showing remarkable buoyancy.

While collections are still high, they must also be backed by a recovery in corporate investment cycles following Covid, according to Rohinton Sidhwa, the partner at Deloitte India.

However, it is unclear if this would be sufficient to counteract the increase in food and fertiliser subsidy expenditures this year, or if the finance ministry will need to impose cuts on non-priority spending in order to fulfil the fiscal deficit target of 6.4% of GDP.

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