After a gap of three years, direct tax collections – which include corporate tax and personal income tax – have exceeded the budget estimates for 2021-22, indicating economic recovery.
As per budget documents, the government has revised upwards the direct tax collection estimates for 2021-22 fiscal from Rs 11.08 lakh crore in budget estimates (BE), to Rs 12.50 lakh crore in revised estimates (RE).
As per the RE, the government expects to collect Rs 6.35 lakh crore from corporate taxes and Rs 6.15 lakh crore from personal income taxes.
This compares with BE figure of Rs 5.47 lakh crore and Rs 5.61 lakh crore in corporate taxes and personal income taxes, respectively.
The last time the government witnessed an increase in direct tax collection over Budget estimates was in 2017-18.
In 2017-18, the collection was revised upwards to Rs 10.05 lakh crore, from Rs 9.8 lakh crore in BE. The actual collection, however, worked out to be Rs 10.02 lakh crore.
As per the Budgetary process, the government provides revenue collection estimates or BE before the start of a financial year. These figures are revised at the time of presentation of the BE for next financial year. The actual collection figure, however, comes in later after the end of the fiscal.
Usually, the tax collection at the end of the year falls short of BE which is estimated before the beginning of a fiscal.
In 2018-19, the BE for direct tax collection was Rs 11.50 lakh crore, which was revised upwards to Rs 12 lakh crore. However, the actual collection turned out to be lower at Rs 11.37 lakh crore.
In 2019-20, the BE for collection was pegged at Rs 13.35 lakh crore, which was revised downwards to Rs 11.70 lakh crore. The actual turned to be even lower at Rs 10.49 lakh crore.
In 2020-21, the direct tax collection in budget estimates was at Rs 13.19 lakh crore. The Covid-19 pandemic hit the country within a month of setting of this target, forcing the government to significantly revise downwards its collection target to Rs 9.05 lakh crore in RE. The actuals, however, worked out to be Rs 9.44 lakh crore.
Finance minister Nirmala Sitharaman on Tuesday pegged the direct tax collection at Rs 14.20 lakh crore for FY2022-23. This includes Rs 7.20 lakh crore from corporate taxes and Rs 7 lakh crore from personal income taxes.