Improved compliance and high growth in Personal Income Tax (PIT) propelled net direct tax collection to grow over 20 per cent during April 1 and February 20 of 2023-24, Income Tax Department reported on Sunday.
Apart from PIT, direct taxes include Corporate Income Tax. PIT also comprises of Securities Transaction Tax (STT).
On February 1, the Union Budget had raised the estimate for direct tax collection to ₹19.45 lakh crore from ₹18.23 lakh crore.
According to the Department, Direct Tax collection stood at ₹15.60 lakh crore, which is 20.25 per cent higher than the net collections of ₹12.97 lakh crore in the corresponding period last year. This collection is over 80 per cent of the total Revised Estimates of Direct Taxes for FY 2023-24. The Department expects that, during the remaining 40 days of the current fiscal, covering the remaining proportion of the estimate will not be difficult.
PIT has seen better growth than CIT. Data showed that while the net growth of CIT collection was over 13.5 per cent, PIT collection (net) surged by over 27 per cent. The net number is calculated after deducting refunds from gross collections. “Refunds amounting to ₹2.77 lakh crore have been issued during April 1 and February 10,” the Department said.
Although the IT Department has not specified any reasons for the increase in the collection, the Budget document has listed several reform measures resulting in a much better collection. One such measure has been the expansion of the scope of TDS (Tax Deducted at Source/TCS (Tax Collected at Source) to include new transactions like foreign remittance, purchase of luxury cars, e-commerce participants, etc.
Similarly, a new provision has been introduced in the Income Tax Act requiring the successor entity to file a modified return within six months of the order of reorganization being passed by the competent authority. Another measure is an e-verification scheme which enables the authorities to collect information for accurate and comprehensive determination of income to reduce tax evasion.
The document mentioned that PAN is now being leveraged to become a Business Identification Number (BIN) for providing registration to several government departments and services. During the year, 47.09 lakh new e-PANs have been allotted. Also, the integration of PAN with AADHAR has been carried out to facilitate de-duplication. As on 31st December, 2023, a total of 58.76 crore PANs are linked with Aadhaar. An Integrated e-Filing and Centralised Processing Center 2.0 (CPC 2.0) project was launched to provide better e-filing experience, ease of compliance, and more accurate and faster processing of ITRs.
As on December 31, 2023, a total of 8.18 crore ITRs (Income Tax Returns) have been filed for AY 2023-24 which is nine per cent higher than the ITRs filed during the corresponding period for AY 2022-23. Out of these, eight crore ITRs have been verified. All these helped to improve the compliance and in turn better collection, the IT Department said.