The Centre collected a net amount of Rs 9.45 lakh crore as direct taxes in 2020-21, up Rs 40,000 crore or 4.4 per cent from the revised estimate (RE) presented in the Budget on February 1, thanks to improved collections in the second half of the year, especially in the fourth quarter. Had the government not been liberal with refunds — up Rs 78,000 crore or 42 per cent on year at Rs 2.61 lakh crore — the net collections would have been even higher.
This, coupled with revenue from ‘Union excise duties’ likely being higher than the respective RE by Rs 30,000 crore, would likely allow the Centre to rein in the fiscal deficit at a level slightly lower than the RE of 9.5 per cent (RE) of the GDP, at the RE levels of expenditure and other revenue streams. The National Statistical Office in the second advance estimate predicted a narrower contraction in nominal GDP of 3.8 per cent in FY21, against a 4.2 per cent fall estimated earlier; if this holds true, it would have a further salutary effect on the fiscal numbers. Robust GST collections in recent months have brightened the prospects of the Central GST collections being higher than the RE.
According to provisional figures of direct tax collections for FY21 released by the Finance Ministry Friday, net (post-refunds) corporation tax collections stood at Rs 4.57 lakh crore and personal income tax, including security transaction tax, at Rs. 4.88 lakh crore. The break-up of the pre-refund direct tax mop-up is: “Advance Tax of Rs. 4.95 lakh crore; tax deducted at source (including Central TDS) of Rs. 5.45 lakh crore; self-assessment tax of Rs. 1.07 lakh crore; regular assessment tax of Rs. 42,372 crore; dividend distribution tax of Rs. 13,237 crore and tax under other minor heads of Rs. 2,612 crore”. FE