Mint Quick Edit | Will rising direct tax inflows relieve taxpayers?

The bulk of direct taxes are still paid by a small proportion of our population.
The bulk of direct taxes are still paid by a small proportion of our population.

Summary

  • The Centre’s direct tax collections from 1 April to 17 June climbed 21% over the comparable period a year earlier to 4.63 trillion. Time to embark on tax reforms.

Direct tax collections in the first two and a half months-odd of 2024-25 offer an upbeat picture. Net of refunds, the Centre’s direct tax collections from 1 April to 17 June climbed a hearty 21% over the comparable period a year earlier to 4.63 trillion. Of this, 1.81 trillion came by way of corporation tax and 2.81 trillion through personal income tax, including revenue from securities transaction tax. 

The rise in tax inflows overall is encouraging. Sure, some of it might have the first instalment of advance taxes that was due by 15 June to thank. Still, these are healthy figures and suggest that companies and individuals in India are faring well in terms of earnings. However, the bulk of direct taxes are still paid by a small proportion of our population, resulting in a heavy burden that could do with easing. 

Also read: Centre’s net direct tax collection grows 21% so far in FY25

News reports have indicated that finance minister Nirmala Sitharaman’s budget for 2024-25, likely next month, could announce some relief for income taxpayers. While this may help, what India needs is a widened tax net. It also needs to ensure that progressive direct taxes don’t fall behind regressive indirect levies. This may require the Centre to overhaul both forms of taxation.

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