Direct tax receipts continued to show robust growth in the April-January period of fiscal year 2018 (FY18) as the tax department managed to add more taxpayers as a result of its anti-evasion drive.
The Central Board of Direct Taxes, the apex direct tax policymaking body, said on Friday that net direct tax collections rose 19.3% in the first 10 months of FY18, over the year-ago period, to Rs6.95 trillion. The receipts account for just under three-fourths of the Rs10.05 trillion the government expects in FY18, as per the revised higher projections in Budget 2018-19. The original estimate was a collection of Rs9.8 trillion.
Net corporate tax collections grew 19.2% and net personal income-tax receipts rose 18.6% durApril-January compared to the same period a year ago.
Gross collections before adjusting for refunds stood at Rs8.2 trillion in the April-January period of FY18, a 13.3% growth over the same period a year ago. The difference in the growth rates of gross and net tax collections is on account of a change in the refund cycle. The revenue department expects to collect Rs11.5 trillion in FY19.
Finance minister Arun Jaitley had in Budget 2018-19 said that the direct tax-to-gross domestic product (GDP) ratio is expected to grow to 6.8% in FY18 from 5.6% a year ago.
Intense use of data analytics and follow-up action in suspected cases of tax evasion has led to an increase in the number of effective taxpayers to 82.7 million in FY18 from 62.2 million a year ago, according to the budget documents.
In the Rajya Sabha on Thursday, Jaitley claimed that the wider direct tax base was on account of structural reforms such as demonetization and roll-out of the goods and services tax (GST).
According to Daksha Baxi, executive director at law firm Khaitan and Co., the jump in direct tax receipts can be attributed to the massive information collected by the tax officials through data analytics post-demonetization.
Baxi said that GST registration was beneficial to small enterprises in supplying goods and services to large organizations, which insist on GST registration, as well as in claiming input credit for the GST paid. “This has led to hitherto informal income coming into the formal economy and thereby resulting in higher tax collection. One can expect this trend to continue,” she added.