Direct Tax Collections Surge by 23% in India

NEW DELHI: The Central Board of Direct Taxes (CBDT) announced a remarkable rise in direct tax collections, which have surged over 23% to Rs 6,45,239 crore up to July 11 this financial year. This surge has been primarily driven by a faster increase in personal income tax.

On a net basis, collections soared by 19.5%, reaching beyond Rs 5.7 lakh crore, despite refunds jumping almost 65% to Rs 70,902 crore during this period. Gross corporate tax collections also saw a significant increase, rising 20.4% to Rs 2,65,336 crore. Meanwhile, personal income tax, including the securities transaction tax (STT), rocketed by 25.3% to just under Rs 3.8 lakh crore.

“The significant surge in corporate profits is reflected in the first quarter’s advance tax collections. Additionally, a booming stock market has fueled an increase in STT collections. This strong collection backdrop, leading into the upcoming budget, suggests the government might effectively manage the fiscal deficit,” said Rohinton Sidhwa, Partner at Deloitte India.

So far this year, both direct and indirect tax collections have remained robust. A significant dividend from the Reserve Bank of India has further bolstered the government’s receipts. Finance Minister Nirmala Sitharaman is expected to adhere to her projections on the tax front, given that the Indian economy is anticipated to grow over 7% in the current financial year.

These higher-than-budgeted collections will be beneficial for the central government, as there is ongoing pressure to increase spending in critical sectors such as agriculture, health, and education. Moreover, maintaining capital expenditure for infrastructure is also crucial, making these strong tax collections particularly timely.