Govt’s tax revenue in FY22 jumps 34% at ₹27 lakh cr crossing target by ₹5 lakh cr

The Union government’s total tax revenue jumped 34% to ₹27.07 lakh crore in 2021-22, which is about ₹5 lakh crore more than the Budget estimate that shows rapid economic recovery after waves of Covid-19 pandemic since March 2020 besides efficient tax administration.

According to provisional official data released on Thursday high revenue collections for 2021-22 is led by 49% growth in direct taxes and 20% growth in indirect taxes. The revenue estimate of the Union Budget 2021-22 was ₹22.17 lakh crore. Revenue collections in the previous financial year were ₹20.27 lakh crore.

According to the data, total direct tax collections in the financial year ended March 31, 2022 is ₹14.10 lakh crore and indirect tax at ₹12.90 lakh crore.

“The decrease in tax collection the two years 2019-20 and 2020-21 is due to the disruption in economic activity in wake of Covid-19, but the rise in tax collection in the financial year 2021-22 is evidence of a sharp rebound and an economy that is back on track,” Union finance ministry said in a statement.

Besides economic recovery, the ministry also gave credit to a slew of measures for ease of compliance such as pre-filled tax-returns, faceless assessment, new annual information statement (AIS), generation of e-way bills and use of data analytics and artificial intelligence to check evasions. “Several initiatives taken by the government under its mission to push for a Digital India have laid the foundation for modern, convenient and transparent taxation system,” it said.

The surge in tax revenues has lifted India’s tax to GDP ratio for the year 2021-22 to 11.7%, which includes a direct tax to GDP ratio at 6.1% and indirect tax to GDP ratio at 5.6%, it said.

The year saw a significant growth in corporate tax that shows robustness of the economy. “The gross corporate taxes during 2021-22 was Rs. 8.6 lakh crore against Rs. 6.5 lakh crore last year, which shows that the new simplified tax regime with low rates and no exemptions has lived up to its promise, enhancing Ease of Doing Business for the corporate sector, stimulating India’s economy and increasing tax revenues for the Government,” it said.

The number of corporate tax returns filed by businesses has also jumped by 43,000 to over 986,000 for AY 21-22. “This jump in corporate tax returns is the highest in recent years. The remarkable aspect of this particular jump in returns is that it has come with respect to a year marked by a pandemic-induced contraction in the economy, further underscoring the role played by compliance enforcement,” the finance ministry said.

“This significant revenue growth has been propelled by robust economic recovery following the onslaught of the global pandemic, supported by one of the largest immunization programme of the world run by the Government,” it said.

The Union government’s focus on making India a global economic powerhouse and the host of measures adopted towards this commitment has directly reflected in India’s GDP growth in recent years, it said. “This has translated into increased revenue collection for the exchequer while keeping India well on the track towards achieving a USD 5 trillion economy in line with Prime Minister Narendra Modi’s vision,” it added.

The ministry said faster processing of tax returns boosted trust of taxpayers and helped in robust collections. “During the year, Income tax department gave refunds of Rs. 2.24 lakh crore. A total of 2.4 crore refunds were issued,” it said. The average processing time for returns during 2021-22 was 26 days. In the year, 7.14 crore returns were filed as compared to 6.97 crore last year.

“This has been made possible due to the faster processing of returns through the new e-filing portal which was launched in June 2021. This taxpayer friendly portal is integrated with immediate processing of Income Tax Returns (ITRs) to issue quick refunds to taxpayers, thereby offering them a convenient, seamless experience and ensuring better compliance,” it said.

Another feature that has improved voluntary compliance is the faceless hand-holding of the taxpayers, provided by the new Annual Information Statement (AIS), to e-file their income tax returns quickly and correctly, it said.

The improved Form AIS carries details on taxpayers’ financial transactions as specified in the Statement of Financial Transactions (SFTs) in various categories. Apart from acting as a ready reckoner for financial transactions, Form AIS helps honest taxpayers with updated financial transactions while filing their returns. It also desists those taxpayers who inadvertently omit financial transactions in their returns.

Similarly several reforms helped robust GST collections in 2021-22. “GST has seen an exemplary growth during 2021-22 despite two waves of Covid-19 pandemic,” the ministry of finance said. The Central GST (CGST) revenues increased from Rs. 4.6 lakh crore last year to Rs. 5.9 lakh crore in 2021-22. The average monthly gross GST revenue (including shares of states) in 2021-22 was Rs. 1.23 lakh crore as compared to Rs. 94,734 in 2020-21 and Rs. 1.01 lakh crore in 2019-20, it said. March 2022 witnessed an all-time high GST collection at Rs. 1,42,095 crore.

The finance ministry is confident about maintain the collections trend in 2022-23. “With a big push to capex in the Union Budget of 2022-23, the coming years are going to see a surge in domestic manufacturing as well as growth in employment. These in turn will directly boost tax contribution to the exchequer,” it said.