Net Direct Tax Mop-Up Spikes 19% to Rs 14.7 Lakh-Crore Until January 10

The Revised Estimate (RE) for direct tax collection in the Interim Budget is set to be higher than the Budget Estimate (BE) this financial year, with the government achieving 80.61% of the BE by January 10, 2024.

The Interim Budget is scheduled to be tabled in the Lok Sabha on February 1, 2024.

Direct tax collection, net of refunds, spiked by 19.41%, which stood at Rs 14.70 lakh-crore until January 10 Year-On-Year (YoY).

Refunds amounting to Rs 2.48 lakh crore were issued from April 1, 2023, to January 10, 2024. In case the refunds are added, direct tax revenues rose by 16.77%t clocking Rs 17.18 lakh crore.

Considering that more than two and a half months remain in this financial year, 19.39% of the BE would be easily exceeded with one more advance tax installment yet to come; also, March usually reports high tax numbers.

The Budget for 2023-24 had estimated direct tax collection at Rs 18.23 lakh crore, higher by 10.5% over the Rs 16.5 lakh crore projected in the RE for the previous financial year.

Meanwhile, direct tax collection was about Rs 16,000 crore less than the RE for FY23. As compared to the collection of Rs 16.34 lakh crore during 2022-23, the BE estimated for 2023-24 was 11.58% up.

Corporation tax receipts and net refunds grew 12.37% during the YoY period. Personal income tax receipts, excluding Securities Transaction Tax (STT), rose by 27.26%, including STT by 27.22%.

The earlier data reported that the Central Goods and Services Tax (CGST) yielded Rs 6.26 lakh crore during April-December – 77% of the Rs 8.12 lakh crore estimated in the BE for 2023-24. As three more months remain in this financial year, CGST receipts may exceed the BE.

A positive direct tax collection and CGST would aid the government in making up for an expected dip in excise duty and a moderate spike in customs duty collection.

After 42%  devolution to the states, this, along with positive numbers of non-tax revenues, is likely to allow the Centre to keep its fiscal deficit at Rs 17.87 lakh crore in this financial year amid a dip in disinvestment receipts and expected rise in revenue expenditure due to various subsidies. 

Maintaining the deficit at 5.9% of Gross Domestic Product (GDP) is likely to be a tough game due to an estimated lower nominal GDP growth of 8.9% against the Budget assumption of 10.5%. It could be met in cases where expenditure experiences a cut.