The net direct tax collection has registered a shortfall of 5.4 per cent during April-January period of the current fiscal. Net collection is the the gross collection minus income tax refunds.

Direct taxes are levied on the income, which includes personal income tax and corporate tax besides small component such as Securities Transaction Tax (STT), which is levied on stock market transactions.

According to sources, from April 1, 2019 to January 25, 2020, the net collection stood at approximately Rs 7.3 lakh crore as against Rs 7.7 lakh crore mobilised during corresponding period of previous fiscal.

So there is a gap of Rs 40,000 crore or a 5.4 per cent shortfall. On gross basis, the total collection came down to Rs 9-lakh crore approximately from Rs 9.11-lakh crore showing a shortfall of Rs 11,000 crore or 1.27 per cent. The gross collection target, as mentioned in the Budget, is Rs 13.35-lakh crore.

Sources informed that this shortfall is mainly on account of the highest income refunds to the tune of Rs 1.70-lakh crore as against Rs 1.39-lakh crore of last fiscal. Also, the government cut in corporate tax is estimated to cost the exchequer Rs 1.45-lakh crore.

But despite the likely shortfall at the end of fiscal, the government feels that the overall direct tax collection will be proportionately better than last year.

There were some media reports recently that said that the direct tax mop-up could fall for the first time in two decades.

Talking about refunds, sources said that this year due to ease of online return filing and pre-filled form facility, Aadhaar OTP based authentication; the processing of refunds became easier.

Most of the refunds, where no queries were made, were given within three days of the last date of return filing. Combined with a 10 per cent increase in the personal income tax collection, all these factors pushed refunds to a record level.

The government also feels that the recent corporate tax cuts will boost, not only investments and make India a lucrative business hub, but would also create jobs and increase income, leading to higher consumption and speedy economic growth. Despite the tax cut, the shortfall in gross corporate tax is only 7.5 per cent vis-a-vis the last year.

The direct tax collection target for this year at Rs. 13.35-lakh crore is 17.7 per cent higher than last year’s collection of Rs. 11.34-lakh crore.

The CSO’s growth estimate for 2019-20 at 5 per cent will in all likelihood affect tax collection but not to the extent feared, said a source.

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