The rise in gross tax mop-up was mainly due to a jump in corporate tax collections during August.
The Centre’s gross tax revenue (after refunds) in April-August stood at Rs 11.89 trillion, accounting for 35.4% of the Budget estimate for FY24, data released on Friday by the Controller General of Accounts showed. On a year-on-year basis, the collections rose 16.5% in the period, compared with a growth of 10% needed to meet the Budget Estimate for the whole year.
The rise in gross tax mop-up was mainly due to a jump in corporate tax collections during August.
After contracting for four consecutive months, corporate tax collections surged 462.9% year-on-year in August, thanks to robust advance taxes and a very favourable base. This allayed fears caused by relatively low growth in corporate tax collections in the previous months of the year.
According to DK Pant, chief economist at India Ratings, while corporate tax collection in August 2022 was 77.3% lower than average for previous four months and in August 2023, the collection was 42.7% higher than average of previous four months. In absolute terms, the collections in August last year was Rs 11,159 crore, while the same was Rs 62,817 crore in August 2023.
The cumulative corporate tax mop-up in April-August this year stood at Rs 2.39 trillion, up 15.1% on year. To meet the Budget estimate of Rs 9.23 trillion, corporate tax collections will have to rise 10.7% year-on-year in the remaining seven months of FY24.
“Advance tax collections so far appear to be showing buoyancy indicating higher corporate earnings being estimated for financial year 2023-24,” said Rohinton Sidhwa, partner, Deloitte India. “If this trend continues, the budget estimate may be exceeded.”
Data released by the finance ministry earlier this month showed that the advance direct tax collection stood at Rs 3.55 trillion till mid-September, 21% higher than the corresponding period of last year.
Personal income tax collections in April-August rose 35.7% year-on-year to Rs 3.60 trillion, and collections from central goods and services tax soared 17.3% to Rs 3.36 trillion. Collections from customs duty stood at Rs 83,518 crore, 27.8% higher on year; while excise duty mop-up decreased 12.4% to Rs 99,776 crore.
Going forward, a slower nominal GDP growth may affect tax collections, say experts.
Source:financialexpress.com