Income-tax collections grow 20% in one year, nears ₹20 lakh crore mark

The Union finance ministry on Monday reported over 20% year-on-year jump in gross direct tax revenue at ₹19.68 lakh crore for the financial year ending March 31, 2023, days after it declared about 22% annualised growth in Goods and Services Tax (GST) collections at ₹18.1 lakh crore, reflecting sustained growth in economic activities, better tax administration and ease of compliance.

The provisional figures of direct tax collections for the financial year 2022-23 show that net collections [after refunds] are at ₹16.61 lakh crore, compared to ₹14.12 lakh crore in the preceding financial year, representing an increase of 17.63%, the ministry said in a statement.

Robust net direct tax collections that include corporate income-tax (CIT) and personal income-tax (PIT) despite an increase in refunds. “Refunds of ₹3,07,352 crore have been issued in the FY 2022-23 showing an increase of 37.42% over the refunds of ₹2,23,658 crore issued in FY 2021-22,” it said.

The provisional direct tax collections after refunds exceeded the Budget Estimates (BE) by 16.97% and Revised Estimates (RE) by 0.69%, it said. The BE for direct tax revenue in the Union Budget for 2022-23 was fixed at ₹14.20 lakh crore, which was later raised at ₹16.50 lakh crore in the RE stage.

“The gross collection (provisional) of Direct Taxes (before adjusting for refunds) for the FY 2022-23 stands at Rs. 19.68 lakh crore showing a growth of 20.33 % over the gross collection of Rs.16.36 lakh crore in FY 2021-22,” the ministry said in a statement.

It reported the gross CIT in 2022-23 at ₹10,04,118 crore, a 16.91% jump over the gross corporate tax collection of ₹8,58,849 crore of the preceding year. Gross PIT collections in FY23 was ₹9,60,764 crore (including Securities Transaction Tax or STT), showing a growth of 24.23% as compared to ₹7,73,389 crore collected in the same period previous year.

According to the budget documents, the government initially estimated corporate income tax (CIT) collections in 2022-23 (BE) at ₹7.20 lakh crore and estimated taxes on income or personal income tax (PIT) at 7 lakh crore. Later, it raised CIT to ₹8.35 lakh crore in RE for 2022-23 and PIT to ₹8.15 lakh crore.

The country’s indirect tax collections – GST – in FY23 was also robust with the second highest ever monthly revenue in March at little over ₹1.60 lakh crore. The revenue of the closing month saw FY23 collections surge to over ₹18.07 lakh crore gross revenues, a 21.87% year-on-year growth exhibiting India’s economic resilience amid global headwinds.

Vivek Jalan, partner at consultancy Tax Connect Advisory said: “Income Tax and GST, both are complementing and supplementing each other.”

Jalan said the reforms in income-tax laws and digitisation of tax administration has raised the level of compliance. “Tools like AIS/TIS (Annual Information Statement/Taxpayer Information Summary) lead to the data of taxpayers being pulled and automatically reconciled by the department. And expansion of TDS/TCS (Tax deducted at source/Tax Collected at Source ) provisions help tracking the transactions from the source and up the value stream. These leading to substantial gains in terms of collection,” he added.