Direct Tax Collections Surpass Expectations in Fiscal Year 2023-24
In a significant fiscal development, the government’s direct tax collections for the fiscal year 2023-24 have not only met but exceeded the set expectations. The total revenue from direct taxes amounted to over ₹19.58 lakh crore, showcasing a strong performance against both the budget estimates (BE) and revised estimates (RE).
Direct taxes, which include Personal Income Tax (PIT)—comprising securities transaction tax—and Corporate Income Tax (CIT), are pivotal indicators of economic health, reflecting growth in personal income levels and corporate profitability. This year’s direct tax collection surge arrives alongside news from the Central Board of Indirect Taxes and Customs (CBIC) that indirect tax collections, encompassing Customs and Central Excise Duty, have also surpassed RE by a notable margin.
Delving into the composition of these collections, the Finance Ministry reported a 17.7% increase in net direct tax collections, totaling ₹19.58 lakh crore for FY24, up from ₹16.64 lakh crore in the previous fiscal year. This uptick is attributed to higher overall income levels, improved compliance, and streamlined tax payment processes, though the ministry stopped short of specifying these factors in their statement.
The initial target for direct tax collection was set at ₹18.23 lakh crore, later revised to ₹19.45 lakh crore. The provisional data proudly announces a surpassing of the budget estimate by 7.7% and the revised estimate by 0.7%, a feat accomplished even amidst significantly larger refunds. Approximately ₹3.79 lakh crore in refunds were issued in FY24, marking a 23% jump over the previous year’s ₹3.09 lakh crore.
A breakdown of the figures reveals that personal income tax collection, including securities transaction tax, experienced a remarkable 25.23% growth, netting ₹10.44 lakh crore for FY24. This demonstrates a robust increase from the preceding year’s collection of ₹8.33 lakh crore. Meanwhile, corporate tax collections also saw a healthy rise, climbing over 10% to reach ₹9.11 lakh crore from ₹8.26 lakh crore in FY23.
Experts view this growth trajectory in a very positive light. Sumit Singhania, Partner at Deloitte India, commented on the significance of these numbers amidst an election year, recognizing them as indicators of macro-economic resilience. He emphasized the importance of such fiscal discipline for the incoming government, highlighting its role in facilitating policy reforms and enhancing taxpayer services.
This financial year also witnessed a milestone in Goods and Services Tax (GST) collections, with a total gross collection of ₹20.18 lakh crore, an 11.7% increase from the last fiscal year. The ascent in GST, a tax levied on the end consumer, points to an improvement in consumption patterns across the nation. With an average monthly GST intake of ₹1.68 lakh crore, there’s a clear upward trajectory from the previous year’s average of ₹1.5 lakh crore.
The comprehensive growth in tax collections sets optimistic expectations for the fiscal deficit’s final figures, potentially lowering them below the revised estimate of 5.8%. As stakeholders eagerly await the full budget post-elections, the enhanced tax revenue paints a promising picture for India’s economic solidity and fiscal health.
