Direct tax collection grows 40% driven by personal income tax from Apr-Jul

During the April-July period, the central government achieved more than a third of the direct tax collection for this financial year as personal tax collection exceeded corporation tax mop-up amid tightened enforcement and compliance measures, according to official figures.

Overall direct tax collections, net of refunds, including corporation and personal income tax, grew by 40 per cent in the first four months of FY23 to Rs 5 trillion, which is nearly 35 per cent of the target of Rs 14.2 trillion for the whole fiscal year, a report by Livemint stated.

Meanwhile, direct tax refunds increased by 38 per cent to Rs 67,000 crore.

As the central government has cut taxes on petrol and diesel to tame rising rates driven by a spike in global crude prices, robust direct tax collections will help the government bridge the shortfall in indirect taxes.

Personal income tax collection posted a growth of 52 per cent YoY at Rs 2.67 trillion, while corporation tax collection stood at Rs 45,000 crore.

The government officials attributed the rise in direct tax collections to tightened enforcement and compliance using technology including the use of the Annual Information Statement (AIS).

Introduced last year, the AIS provides comprehensive information to taxpayers on their financial transactions. The purpose of the new AIS is to make it easier for taxpayers to file their returns.

“We have seen a sharp increase in self-assessment tax mop up, which could be a result of the introduction of AIS and data collection from different source agencies,” said a government official, quoted Livemint.

Self-assessment tax jumped 275 per cent to Rs 43,500 crore in the April-July period, while personal income tax collection stood at 38 per cent of the FY23 budget target of Rs 7 trillion.

On the other hand, corporation tax collection was up by 32 per cent to Rs 2.2 trillion, against Rs 6.73 trillion of personal income tax.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor