Personal Income Tax Behind 40% Rise In Tax Collection

| Updated: August 15, 2022 3:50 pm

In a record of sorts, the Union government has already achieved over a third of the direct tax collection target for this fiscal during the April-July period. A fiscal is counted from one budget to another. In India, this one-year period begins on April 1 and concludes on March 31 of the following year.

Overall direct tax collections, net of refunds, comprising corporation tax and personal income tax, grew by 40% in the four months up to July to ₹5 trillion, or about 35% of the full year’s target of ₹14.2 trillion. Personal income tax collection exceeded corporation tax mop-up amid tightened enforcement and compliance measures, official data shows. Direct tax refunds rose 38% to ₹67,000 crore.

This robust tax performance will provide the government with additional spending muscle amid global uncertainty. The corpus is also likely to help bridge the shortfall in indirect taxes, particularly excise duty, as the government cut taxes on petrol and diesel to control spiralling retail prices following a spike in global crude prices.

Personal income tax collection at ₹2.67 trillion has exceeded corporation tax collection by ₹45,000 crore, posting a 52% growth over the previous year. This comes even as the ministry of finance did not extend the income tax filing deadline beyond July 31, for the first time in nine years.

Government officials have attributed the encouraging trend to tightened enforcement and compliance using technology including the introduction of Annual Information Statement (AIS) last year. AIS gives a taxpayer a comprehensive view of financial transactions carried out during a financial year, including interest, dividend, securities transactions, mutual fund transactions and foreign remittances.

“We have seen a sharp increase in self-assessment tax mop up, which could be a result of the introduction of AIS and data collection from different source agencies,” stated a government official.

With that, self-assessment tax, which is part of personal income tax, jumped 275% to ₹43,500 crore in the period up to July. Personal income tax has touched 38% of FY23 budget target of ₹7 trillion.

Meanwhile, corporation tax collection rose 32% to ₹2.22 trillion. It is 31% of FY23 budget target of ₹7.2 trillion. In 2021-22, corporation tax collection stood at ₹7.12 trillion, as against ₹6.73 trillion in case of personal income tax.

According to financial analysts, the income tax department’s AIS reminds taxpayers about transactions in a particular financial year. The scope of taxes collected and deducted at source (TCS and TDS) has increased over the years and it has become an important source of tax revenue receipts. The government from July 1 this year, introduced a 1% TDS on virtual digital assets for transactions of more than ₹10,000. Securities transaction tax grew by 8% to ₹10,000 crore in the April-July period.

Read More: CW Sec-Gen Calls India’s Help To Sri Lanka Generous, Faceted

Your email address will not be published.