The government’s net direct tax collections for April-January rose 19.3 per cent year-on-year to Rs 6.95 lakh crore, primarily due to a sharp surge in net corporate tax collections, data released by income tax department showed.
Corporate tax collections, on a net basis, recorded a double-digit growth of 19.2 per cent during April-January this fiscal as against 2.9 per cent growth seen in the same period last year.
The net direct tax collections for April-January this year represent 69.2 per cent of the revised estimates of direct taxes at Rs 10.05 lakh crore, tax department said. Gross collections, before adjusting for refunds, increased by 13.3 per cent to Rs 8.21 lakh crore during April-January.
Refunds amounting to Rs.1.26 lakh crore have been issued during April-January this year, though the tax department did not specify the growth percentage for refunds. Data released last year showed that refunds amounting to Rs 1.41 lakh crore were issued during April 2016-January 2017, which was 41.0 per cent higher than the refunds issued during the corresponding period in the previous year.
The growth rate for personal income tax was slower this year, recording 18.6 per cent growth during April-January this year. In the same period last year, personal income tax collections had recorded a growth of 23.1 per cent.
Tax experts attributed the rise in collections to data collection exercise of cash deposits carried out by the tax department after demonetisation as well as the rollout of GST.
“This jump can be attributed to the massive information collected by the tax officers through Data Analytics post cash deposits post demonetization of Rs 500 and Rs 1,000 notes. They followed up on this information with taxpayers. This can also be attributed to the rollout of GST. GST registration by small enterprises became beneficial to them, especially when they are providing goods and services to large organizations which insist on GST registration. GST registration also helps them in claiming input credit for GST paid and remain competitive. This has led to the hitherto informal income coming into formal economy and thereby resulting in higher tax collection. One can expect this trend to continue,” Daksha Baxi, executive director, Khaitan & Co. said.
Finance Minister Arun Jaitley on Monday had spoken about the rise in corporate tax collections due to GST rollout. “The GST-direct tax relationship is a very curious one. Because of the GST, there’s a direct impact on the income tax side also. The rationalising of GST tariffs also increased the profitability of some companies. Therefore as the rationalisation took place on that quarter, corporate tax which was lagging behind certainly moved up,” he had said.