Advance tax collections for corporate tax, income tax turn positive

Shishir Sinha New Delhi | Updated on March 17, 2021

Net direct tax collection shortfall now 4 per cent


Advance tax collections for both corporate tax and income tax have turned positive at the end of fourth instalment which was to be paid on March 15. Also, shortfall in net direct collection has come down 4 per cent now as against 9 per cent in January and around 13 per cent after payment of third instalment of advance tax on December 15.

Giving updated figure of advance tax collection, a senior Finance Ministry official said that advance tax collections for corporate tax saw an increase of 8.5 per cent on yearly basis. Similarly, for income tax, advance tax collection is now showing an increase of 2.3 per cent. “Overall outlook is positive. Increase in advance tax for advance tax collection implies that corporate earnings have improved significantly,” the official said.

Direct tax mop-up set to exceed revised FY21 target

Advance tax is paid by those who have tax liability of ₹10000 or more in a financial year. It is paid by both salaried and businesses. One can pay the advance tax in four instalments by 15thday of June, September, December and March. On or before June 15, 15 per cent of advance tax is payable. By September 15, it should be 45 per cent of payment less amount already paid. By December 15, it will be 75 per cent of advance tax less already paid and balance amount by March 15. Non-payment of advance tax will invite interest.

Revised estimate

The government earlier set a target of ₹6.81 lakh crore for corporate tax during FY 2020-21 which has been revised to ₹ 4.46 lakh crore. For income tax, budget estimate was ₹ 6.38 lakh crore, but now in the revised estimate, this amount has come down to ₹ 4.59 lakh crore. The government is hopeful of exceeding the revised estimate during current fiscal.

Latest data shows shortfall in gross collection at little over one per cent while for net collection, it is 4 per cent after adjusting the refund.

Mirroring resurgence

Aravind Srivatsan, Tax Leader & Partner with Nangia Andersen LLP said that the narrowing down of the revised tax collection gap to 4 percent post the March advance tax deadline gives some cheer to the economy and mirrors the resurgence seen on the GST collections front over the last quarter.  The growing trend in tax collection factors the taxes collected under the One-time Vivad se Vishwas scheme (close to 100,000 Cr) and focused drive of the Government to counter tax evasion and avoidance through real time interventions using technology and targeted searches .  

Time to shelve personal income tax

"One needs to bear in mind that corporate tax rates were slashed during FY 19-20 which had a base effect in FY 20-21, the Government took measures to accelerate refunds to small taxpayers and many businesses had to set apart higher provisions to tide over pandemic losses. With a massive push to complete divestment targets, the final numbers are eagerly awaited on how the Government will balance its books," he said.





Published on March 17, 2021

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