Income tax and corporate tax collections at Rs 9.45 lakh crore in the fiscal year ended March 31 exceeded the revised target by 5 per cent but were 10 per cent lower than the direct tax collections in the previous year, tax department head said Friday.
The government had projected Rs 13.19 lakh crore from direct taxes in the budget for 2020-21 presented on February 1 last year. This was before pandemic took roots; and post it pummelling the economy, the target – called revised budget estimate – was lowered to Rs 9.05 lakh crore.
Central Board of Direct Taxes (CBDT) Chairman P C Mody said his department has exceeded the revised estimate (RE) despite issuing substantial refunds in the 2020-21 fiscal (April 2020 to March 2021).
Direct tax collections, which consist of income tax and corporate tax, in 2019-20 fiscal was Rs 10.49 lakh crore. As per the provisional figures released on Friday, collection in 2020-21 is Rs 9.45 lakh crore. The target for current fiscal has been set at Rs 11.08 lakh crore.
The collection for just concluded 2020-21 fiscal was 5 per cent higher than the RE, but was 10 per cent lower than the mop up in 2019-20.
During the 2020-21 fiscal, the net corporate tax collection stood at Rs 4.57 lakh crore, while net personal income tax was Rs 4.71 lakh crore. Rs 16,927 crore came from securities transaction tax (STT).
The gross direct tax collection in the last fiscal stood at Rs 12.06 lakh crore. After taking out the refunds of Rs 2.61 lakh crore, the net mop up stood at Rs 9.45 lakh crore. There has been a 42 per cent growth in the refund issuance.
Net direct tax collections for the FY 2020-21 have shown an upswing, despite the inherent challenges brought on by the COVID-19 pandemic on the economy, a finance ministry statement said.
A lot of measures have been taken to ease compliance burden and provide better taxpayer services, Mody said, adding that this got reflected in the tax collection for last fiscal.
He hoped that same spirit in tax collection would continue in the current financial year.
Transparent and fair taxation system gives us the confidence, apart from revival of the economic activity, despite the difficult times, that we will be able to meet the current targets as well, Mody added.
ICRA Chief Economist Aditi Nayar said the direct tax collections appear to have contracted by a modest 3.5 per cet in March 2021, suggesting the back-ended release of refunds.
“Regardless, with direct and indirect tax collections exceeding the Revised Estimates, we expect the fiscal deficit to be limited to Rs. 17.0 -17.2 trillion for the just-concluded fiscal. With the contraction in direct taxes in FY2021 limited to 10 per cent, the growth target for FY2022 as per the Budget Estimates is now around 17 per cent, only modestly higher than the projected nominal GDP growth,” she added.
India Ratings and Research Chief Economist Devendra Kumar Pant said, “The economy is slowly recovering and with 3QFY21 registering positive growth after two consecutive quarters of negative growth, the numbers are more on expected lines. This along with indirect tax collections for FY21 suggests that fiscal deficit in FY21 may be lower than the revised estimate, provided there is no slippage on expenditure side.”
Mody said that the Vivad Se Vishwas scheme has netted about Rs 54,000 crore so far and the last date for payment under the scheme is April 30.
One third of the disputes have been settled under the scheme. I don”t think there is any necessity for any similar scheme, he said when asked if the government was planning any such scheme this year.
The Vivad Se Vishwas scheme provides for settlement of disputed tax, interest, penalty or fees in relation to an assessment or reassessment order on payment of 100 per cent of the disputed tax and 25 per cent of the disputed penalty or interest or fee.
The taxpayer is granted immunity from levy of interest, penalty and institution of any proceeding for prosecution for any offence under the Income-Tax Act in respect of matters covered in the declaration.
To a query on whether it is feasible to again tweak corporate taxes to fit into global minimum corporate tax, Mody said the government has already attempted reduction in corporate taxes.
A further calibration of corporate tax rate will be not the agenda at the given moment because it has already been done (in the country), he said.
Meanwhile, US Treasury Secretary Janet Yellen had earlier this week called for an adoption of a minimum global tax for multinational corporations by the G-20 countries.