Economy

Jaitley paints rosy picture of tax mop-up, sees no note-ban effect

Surabhi New Delhi | Updated on January 12, 2018 Published on January 09, 2017

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Direct taxes up 12% in April-Dec; indirect taxes rise 25%

Refuting claims that economic activity has been hit by the withdrawal of high-denomination currency notes, Finance Minister Arun Jaitley on Monday said tax collections between April and December 2016 have shown a positive trend and risen significantly.

Giving a break-up of the figures, Jaitley told newspersons that direct tax mop-up increased 12.01 per cent to ₹5.53 lakh crore while indirect tax revenue grew 25 per cent to ₹6.30 lakh crore in the first eight months of the fiscal.

Cumulatively, the tax revenue in this period amounted to ₹11.83 lakh crore, against the target of ₹16.3 lakh crore for 2016-17.

‘Real, not an estimate’

“This data is real and not an estimate,” the Minister stressed, adding that value-added tax collection has also risen for most States.

His comments come amidst demands by States, such as West Bengal, for higher compensation for revenue loss under the GST (Goods and Services Tax) regime and in the wake of the Central Statistics Office’s advance estimates, which pegged GDP growth at a three-year low of 7.1 per cent for 2016-17.

“Since there has been a considerable debate in the public space as to the impact of the currency squeeze in November and December, the data for these two months become relevant,” he said.

Jaitley, however, did not comment on the impact of demonetisation on the economy and said he would wait for the actual GDP data.

The tax collection data will likely give some comfort to the exchequer. With proceeds from disinvestment likely to be lower than expected, pressure was building up to meet the fiscal deficit target of 3.9 per cent of the GDP for 2016-17.

Fiscal consolidation

Meeting the tax collection targets will also free up space and help the Centre, which is working on the Union Budget, to maintain its fiscal consolidation roadmap in 2017-18.

On a month-to-month basis, there seems to have been some moderation in the net growth in tax revenue. However, Jaitley said demonetisation of notes did not impact tax receipts as old currency notes could be used to pay tax. According to the Finance Ministry, gross collections of corporate tax and personal income tax rose by 10.7 per cent and 21.7 per cent, respectively, between April and December 2016.

But after adjusting for refunds amounting to ₹1,26,371 crore, net receipts from corporate tax grew by 4.4 per cent, while personal income tax rose by 24.6 per cent.

“This collection is 65.3 per cent of the total Budget Estimates of direct taxes for 2016-17,” the ministry said.

Indirect taxes

Similarly, in the case of indirect taxes, 81 per cent of the full-year target has been achieved in the April-December period.

Net collections of central excise duty grew 43 per cent to ₹2.79 lakh crore, against ₹1.95 lakh crore in the corresponding year-ago period.

Customs duty, however, grew at a muted pace of 4.1 per cent to ₹1.67 lakh crore (₹1.60 lakh crore a year ago).

The Finance Ministry said net indirect tax (including additional revenue generating measures) in December 2016 grew 14.2 per cent over a year ago. “The growth rate in net collection for customs, central excise and service tax was (-)6.3 per cent, 31.6 per cent and 12.4 per cent, respectively, during December 2016, compared to the corresponding month last year,” it said.

It said the de-growth in customs collections appears to be on account of a decline in gold imports by about 46 per cent (in volume terms).

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Published on January 09, 2017
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