BackGovt exceeds 2016-17 tax collection target, revenue jumps 18%
While direct tax mop-up grew 14.2% at Rs8.47 trillion, the indirect tax kitty swelled by 22% over last year to Rs8.63 trillion
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New Delhi: Tax revenue to the central government rose 18% to ₹ 17.1 trillion in the year ended 31 March, aided by steady growth in direct taxes and a sharp jump in excise and service tax receipts.
The robust growth comes despite the economy getting hit by a temporary cash crunch because of the government’s decision to withdraw high-value currency notes in November.
Central excise duty collection rose 33.9% and service tax collection rose 20.2% in 2016-17 even as the economy slowed to 7.1%. This may be because of better tax compliance in the wake of the government’s crackdown on black money.
The better-than-expected growth may also in part be because finance minister Arun Jaitley has been conservative in his original tax revenue estimation, given global economic uncertainties.
Jaitley in his Budget 2017-18 documents, said that formalisation of the unorganized sector on account of the demonetization drive and various tax reforms will further improve the tax-to-GDP ratio to 11.3% in 2016-17, indicating a 17% growth from a year ago.
An official statement from the finance ministry said the total tax receipts in 2016-17 was higher than even the revised estimate of ₹ 16.97 trillion made on 1 February. The government collected ₹ 8.47 trillion in net direct taxes in the year under review after refunds, which was 14.2% higher than the growth reported a year ago.
Net personal income tax collections after refunds grew at 21% and net corporate tax receipts grew at 6.7% in 2016-17 from a year ago. The year also witnessed two rounds of amnesty schemes introduced to let tax evaders come clean on their unaccounted wealth by paying taxes and penalty. In the first round launched in Budget 2016, the tax and the penalty outgo amounted to 45% of the unaccounted wealth declared under the scheme and in the second scheme announced after demonetization, it measured up to 50%.
The income tax department paid a refund of ₹ 1.62 trillion in 2016-17, which was 33% more than what was given a year ago.
Indirect tax receipts from central excise, service tax and customs duty in 2016-17 totaled ₹ 8.63 trillion, 22% more than a year ago. Excise duty collection rose to ₹ 3.83 trillion in the year under review from ₹ 2.86 trillion a year ago. Due to the various steps taken to combat service tax evasion, including the implementation of a negative-list based approach and special audits, collection from the services industry jumped to ₹ 2.54 trillion in 2016-17 from ₹ 2.11 trillion a year ago. Customs duty growth remained moderate at 7.4% in FY 2017 to ₹ 2.26 trillion.
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