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Income Tax Department on Monday reported that the direct tax collection has exceeded revised estimate by over half a per cent for FY23 even though refunds surged by over 37 per cent.
Direct taxes comprise Personal Income Tax (PIT) and Corporate Income Tax (CIT).
According to a statement issued by the Central Board of Direct Taxes, the provisional figures of Direct Tax collections for FY23 reached ₹16.61-lakh crore against ₹14.12-lakh crore in the preceding fiscal, representing an increase of 17.63 per cent. The Budget Estimates (BE) for Direct Tax revenue in FY23 Budget were fixed at ₹14.20-lakh crore and the Revised Estimates (RE) at ₹16.50-lakh crore.
Gross collection (before adjusting refund) has exceeded the BE by 16.97 per cent and RE by 0.69 per cent.
Refunds of over ₹3.07-lakh crore issued in FY23 compared with over ₹2.23-lakh crore showing an increase of 37.4 per cent, the statement said.
It is crucial to focus on improving the collection of direct taxes and GST, as the collection from central excise duty is anticipated to be low. This can be attributed to two rounds of specific excise duty rate cuts on petrol and diesel in FY22 and FY23.
Also, the collection from custom duty has been hit due to the impact on export and import. Moreover, there is a concern that the proceeds from disinvestment will be lower than the revised estimate, despite the fact that the collection from dividends of Central Public Sector Enterprises (CPSEs) has been better. All these factors will affect the fiscal deficit target, which is 6.4 per cent of the current fiscal.
Revamp of IT portal
Commenting on the tax collection, Vivek Jalan, Partner with Tax Connect Advisory, said income tax and GST are complementing and supplementing each other. Further, as more and more businesses and citizens come into the mainstream, the GDP of the country also grows.
“Income Tax Act and portal has also seen a substantial revamping in the last few years. Tools like AIS/TIS lead to the data of taxpayers being pulled and automatically reconciled by the department. And expansion of TDS/TCS provisions helps tracking the transactions from the source and up the value stream. These are leading to substantial gains in terms of collection,” he said.
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