The government has collected 74.3 percent of its increased direct tax target in the first 11 months of the financial year, putting it on track to partly make up for an expected shortfall in indirect taxes.
Net direct tax collections in April to February rose 19.5 percent on a yearly basis to Rs 7.4 lakh crore led by a 20 percent rise in the corporate tax mop up, the Central Board of Direct Taxes said in a statement. The personal income tax mop-up grew 18.6 percent.
During the same period last year, the government had collected Rs 6.17 lakh crore backed by over 19 percent increase in personal income tax. That year, growth in net growth in corporate tax was a mere 2.6 percent.
The impressive increase in direct tax collections this year is an outcome of the targeted collection and compliance measures implemented by the government in the last year, Riaz Thingna, director at Grant Thornton Advisory told BloombergQuint.
The performance is even more notable given the fact that corporate profits have not risen substantially in the same period. Going forward, the growth rate may not be sustainable unless corporate performance improves as some of the contributors this year, like demonetisation, will not give recurring revenues in the same proportion in the coming years.Riaz Thingna, Director, Grant Thornton Advisory
In Union Budget 2018-19, the government revised the target for 2017-18 upwards from the budgeted Rs 9.8 lakh crore to Rs 10.05 lakh crore. If met, the target will help it compensate for lower indirect tax collections after the rollout of Goods and Services Tax.
Gross direct tax collections, before adjusting for refunds, rose 14.5 percent to Rs 8.83 lakh crore in April-February 2018. Refunds amounting to Rs 1.39 lakh crore were issued during the period.