scorecardresearch
Follow Us:
Wednesday, September 23, 2020

Net direct tax mop-up falls 32.3% in June qtr on lockdown, high base effect

Corporate advance tax slumped by nearly 80 per cent, while the advance payment for personal income tax fell by about 64 per cent, income tax officials said.

By: ENS Economic Bureau | New Delhi | June 17, 2020 3:27:42 am
indian economy, india ecnomic slowdown, india lockdown, coronavirus covid 19, Net direct tax , indian taxing system, business news, indian express Individual and corporate taxpayers are required to pay advance tax in four instalments. (File Photo)

The first instalment of advance tax collections declined by over 76 per cent, dragging the net direct tax collections down by 32.3 per cent for the April-June quarter, reflecting the exacerbation of economic slowdown and impact of suspension of economic activity during the lockdown against the COVID-19 pandemic.

Corporate advance tax slumped by nearly 80 per cent, while the advance payment for personal income tax fell by about 64 per cent, income tax officials said.

Individual and corporate taxpayers are required to pay advance tax in four instalments. By June 15, they are required to pay 15 per cent of their tax liability, 45 per cent by September 15 and then 30 per cent and 25 per cent of their liability in the next two installments due December 15 and March 15, respectively.

The fall in advance tax collections are also on a higher base, as by June last year, advance tax payments had been made on the basis of old tax rates since the decision to lower the corporate tax rate was announced later in September.

The zone-wise breakup of net direct tax collections for April-June quarter showed a 42.9 per cent decline in collections from Delhi, 52.2 per cent collections from Chennai, and 43 per cent decline in collections from Hyderabad. However, Mumbai zone recorded a 4.8 per cent rise in net direct tax collections during the same period, while Bengaluru recorded a rise of 16.2 per cent.

Explained

Govt will need to relook budgeted tax targets

The first instalment of advance tax collections for 2020-21 is three-fourth of the amount collected last year, with advance corporate tax slumping at an even higher rate of 80 per cent. The government now faces a tough task of carrying out its expenses with the lower revenue stream projections by corporates and individuals. It also implies that the government will now have to take a quick relook at its budgeted tax targets for this fiscal given that an asking rate of 12.7 per cent (now nearly 28 per cent compared to last year’s actuals) looks unsustainable.

For 2020-21, the government had set a target of Rs 6.81 lakh crore from corporate tax, Rs 6.38 lakh crore from income tax and security transaction tax. The growth rate for total direct tax collections for 2020-21 has been pegged at a high asking rate of 12.7 per cent, which has risen to nearly 28 per cent from the actual collections in 2019-20.

Sticking to the Budget targets in April, the Central Board of Direct Taxes (CBDT) had fixed region-wise targets for personal income tax and corporate taxes for 2020-21, with Mumbai accounting for around 31 per cent of the total country’s target of Rs 13.19 lakh crore. Delhi’s share in the overall target is the second highest with the target set at Rs 1.89 lakh crore or 14.3 per cent of the overall target.

📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines

For all the latest Business News, download Indian Express App.

Advertisement
Advertisement
Advertisement
Advertisement
X