Direct tax collection is expected to exceed the budget estimate by over ₹3-lakh crore, collection trends thus far indicate. The Central Board of Direct Taxes (CBDT) on Sunday reported a growth of 26 per cent between April 1 and December 17 in FY 2022-23.

Direct taxes include Personal Income Tax (PIT) and Corporate Income Tax (CIT). For the current fiscal, the government has estimated ₹14.40-lakh crore to be collected through direct taxes.

“The gross collection of direct taxes (before adjusting for refunds) for FY2022-23 stands at around ₹13.64-lakh crore as compared to over ₹10.83-lakh crore in the corresponding period of the preceding financial year, registering a growth of 25.9 per cent,” said a statement issued by the CBDT. Gross tax collection is now 96 per cent of budget estimate of gross collection of ₹14.20 lakh crore.

Despite higher refund, net direct tax collections have recorded a growth of around 20 per cent and rose to over ₹11.35-lakh crore as against ₹9.48-lakh crore. Even net collection is 80 per cent of gross collection estimate. Earlier, a senior government had said that net direct taxes for full fiscal should be up by between 25 to 30 per cent over FY 22, which is a very healthy considering 49 per cent growth in FY 22. Net collection during FY 22 was over ₹14-lakh crore.

Possible reasons

Though it has not mentioned the reasons, it is believed better profitability of companies coupled with increment in salaries contributed to the collection. ṭ

As companies are doing well, it was reflected in advance tax collection too.

The cumulative advance tax collections for the first, second, and third quarters of the current fiscal stand at over ₹5.21-lakh crore as against ₹4.62-lakh crore for the corresponding period of the immediately preceding FY2021-22, showing a growth of 12.83 per cent. The last date of the third installment was December 15.

Under Section 207, every taxpayer — be it a salaried individual, a freelancer, a professional such as doctor, lawyer, chartered accountant, architect, etc, or businessmen or a company — whose estimated amount of tax to be paid for the assessment year (AY) is ₹10,000 or more is liable to pay advance tax.

It can be paid in four instalments where 15 per cent of the total can be paid in the first, 45 per cent in the second, 75 per cent in the third, and 100 per cent in the fourth instalments. This means three-fourths of overall advance tax estimates have been paid.

Income tax processing speed

Meanwhile, CBDT claimed that there has been a remarkable increase in the speed of processing of income tax returns filed during the current fiscal, with almost 96.5 per cent of the duly verified ITRs having been processed till December 17.

“This has resulted in the faster issue of refunds with almost a 109 per cent increase in the number of refunds issued in the current financial year,” it said.

Refunds amounting to around ₹2.28-lakh crore have been issued in the current fiscal against over ₹1.35-lakh crore issued during the corresponding period in the preceding FY showing a growth of over 68.57 per cent.