Net direct tax collections for FY22 grows over 100% till mid-June

The net direct tax collections for the financial year 2021-22 have grown at a robust pace despite the disruptions caused by the second wave of the Covid-19 pandemic on the economy.

According to the Finance Ministry, tax collections for FY22 up to June 15 have registered a growth of over 100 per cent at Rs 1,85,871 crore, compared to Rs 92,762 crore over the corresponding period of the preceding year.

The net direct tax collections include corporation tax (CIT) at Rs 74,356 crore (net of refund), and personal income tax (PIT), including security transaction tax (STT), at Rs 1,11,043 crore (net of refund).

The gross collection of direct taxes (before adjusting for refunds) for FY22 stands at Rs 2,16,602 crore compared to Rs 1,37,825 crore in same period of the previous year.

This includes corporation tax at Rs 96,923 crore and personal income tax, including security transaction tax, at Rs 1,19,197 crore.

Minor head-wise collection comprises advance tax of Rs 28,780 crore, tax deducted at source of Rs 1,56,824 crore, self-assessment tax of Rs 15,343 crore, regular assessment tax of Rs 14,079 crore, dividend distribution tax of Rs 1,086 crore, and tax under other minor heads of Rs 491 crore.

The Finance Ministry said that despite the extremely challenging initial months of the new fiscal , the advance tax collections for the first quarter of FY22 stands at Rs 28,780 crore against advance tax collections of Rs 11,714 crore for the corresponding period of the preceding fiscal, showing a growth of approximately 146 per cent. This comprises corporation tax at Rs 18,358 crore and personal income tax at Rs 10,422 crore.

This amount is expected to increase as further information is received from the banks, the Finance Ministry statement said.

What is encouraging is that the high tax collection numbers have come even though refunds amounting to Rs 30,731 crore have also been issued during the period under review.

The improved performance on direct tax should be encouraging for the government that is looking at various measures to bring the economy back on rails after the adverse impact of the second wave of the pandemic wanes.

For the government, indirect tax collections till May this year has already brought cheers as April numbers of GST reached record high levels since the introduction of the new tax system, while May numbers have not been that bad, remaining above the Rs 1 lakh crore mark.

Improved revenues are key for the government to maintain fiscal discipline and contain the country’s fiscal deficit within manageable limits.