The Centre’s gross tax revenue (GTR) stood at Rs 8.31 trillion in the first quarter of FY25, which is 23.7% higher from the corresponding period of last year, data released by the Controller General of Accounts showed on Wednesday.
The growth in actual mop-up in Q1FY25 is way higher than 10.8% growth projected for GTR for the full financial year. This is primarily a the result of a sharp rise in direct tax collections.
Corporate tax collections during April-June stood at Rs 1.75 trillion, which is 25.9% higher than in the year ago quarter; and personal income tax collections stood at Rs 2.87 trillion, about 50% more than the growth recorded in Q1FY24.
Experts say access to large amounts of data with the authorities coupled with interplay of exchange of information with various regulators and other bodies is one of the key factors where corporates and non-corporates behind the sharp rise in collections.
“Ease of compliances including payment of taxes at a click of a button, and processing of refund payments quickly by the tax department post income-tax return filing have helped direct tax collections surge in this growing economy,” said Dipesh Jain, partner, Economic Laws Practice.
On the indirect tax front, collections were robust in case of GST; but both customs and excise duty mop-up growth contracted in Q1FY25 as against Q1FY24.
Central GST collections were up 10.7% on year at Rs 2.28 trillion during April-June. Customs duty collections, however, were down 4.1% at Rs 47,065 crore. Excise duty mop-up too was down 1.9% at Rs 51,357 crore.
The Budget, presented on July 23, has pegged CGST collections to grow 11% on year in FY25. Customs and excise collections are also projected to grow 2% and 4.5%, respectively.
While the Budget has projected overall growth of customs and excise collections over last year, the decline in the mop-up is primarily due to an economic slowdown and sector-specific challenges, say experts.
“The impact of economic measures and recovery plans often takes time to manifest fully. The lag between policy implementation and actual economic activity can result in quarterly discrepancies,” said Sandeep Sehgal, partner-tax, AKM Global.
Meanwhile, the net tax revenue of the Centre (excluding transfer to states) stood at Rs 5.5 trillion, up 26.8% on year, during Q1FY25; and non-tax revenue growth during the first quarter stood at Rs 2.8 trillion, up 80.7% on year, which pushed total revenue receipts growth (26.8%) almost double of the Budget projection. The jump in non-tax revenue mop-up was due to massive surplus transfer of Rs 2.11 trillion from the Reserve Bank of India to the Central exchequer, in May.
Revenue receipt growth, however, is likely to slow down going forward due to fall in non-tax revenue growth. “However, the fiscal arithmetic being conservative, FY25 revenue targets are likely to be achieved,” said India-Ratings and Research in a note.
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