The Centre’s tax collections continued to exhibit buoyancy with gross-tax revenue (GTR), net of refunds, recording a sharp 16.3% year-on-year growth in the first half of FY24, data released by the Controller General of Accounts (CGA) showed on Tuesday. This compares with 10% growth budgeted for the whole fiscal year.
The sharp growth in GTR in H1 was primarily driven by a sharp jump in personal income tax mop-up, while the growth in corporation tax and Customs collections too have been significantly higher than the budgeted rates. Elevated inflation also contributed to the higher collections, especially on the GST and Customs fronts.
Aditi Nayar, chief economist, ICRA said: “With a 27% rise in corporation tax collections in September amidst healthy advance tax inflows, nearly 49% of the FY2024 BE had been collected, which is an encouraging trend.”
Last week, an official from the finance ministry had told FE that Centre’s direct tax collections may “comfortably” exceed Rs 19 trillion, as against the Budget Estimate of Rs 18.23 trillion.
On the indirect tax front too, buoyancy in collections is being observed. Central GST collections in April-September rose 16.6% year-on-year to Rs 3.98 trillion, and collections from GST compensation cess increased by 11.7% to Rs 69,131 crore.
Excise duty collections, however, declined 10.8% year-on-year to Rs 1.25 trillion. The sharp drop in excise duty collections is in contrast with 9.2% Budgeted growth in FY24. The cut in excise (and cess) rates on auto fuels in May 2022 is seen to be the main reason for the shortfall in excise revenue.
“While central tax collections have soared, the unexpected dip in union excise duty collections, primarily from petroleum and tobacco, stands in contrast. With the rising adoption of electric vehicles potentially reducing fuel consumption, the dynamic might be shifting. In this light, the Budget’s aspiration for a 9% YoY increase in excise collections appears ambitious,” said Sandeep Sehgal, Partner-Tax, AKM Global.
A ministry official told FE on Tuesday that excise duty collections in FY24 by the Centre may show muted growth as compared to last year. “The Centre shall meet the Budgeted Estimate for GTR of Rs 33.6 trillion this fiscal year in the light of buoyancy in GST and direct tax collections…our only concern is excise duty,” the official said.
Swatantra Bhatia, Tax Partner, Mazars, said, “In light of the Budget’s anticipatory projection of a 9% year-on-year upturn in excise duty collections, a meticulous evaluation of the prevailing economic conditions and their implications for this revenue source is warranted. A comprehensive analysis of the intricacies within the excise duty framework is essential to determine the feasibility of attaining this target.”
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