The Centre achieved more than a third of the direct tax collection for this financial year during the April-July period as personal tax collection surpassed corporation tax mop-up amid tightened enforcement and compliance measures, according to official figures.
Overall direct tax collections, net of refunds, including corporation and personal income tax, jumped 40 per cent in the first four months of FY23 to Rs 5 lakh crore, which is nearly 35 per cent of the target of Rs 14.2 lakh crore for the whole fiscal year, according to the report in publication Mint.
Direct tax refunds also witnessed a rise by 38 per cent to Rs 67,000 crore. With the government slashing taxes on petrol and diesel to tackle the rising rates triggered by a spike in global crude prices, the robust direct tax collections will aid the government in bridging the shortfall in indirect taxes.
What led to the robust growth in personal income tax collection?
Personal income tax collection witnessed a growth of 52 per cent YoY at Rs 2.67 lakh crore, while corporation tax collection stood at Rs 45,000 crore, as per the report.
According to the government officials, the rise in direct tax collections is driven by tightened enforcement and compliance using technology including the use of the Annual Information Statement (AIS).
Introduced last year, the AIS provides comprehensive information to taxpayers on their financial transactions. The new AIS was aimed to make it easier for taxpayers to file their returns.
“We have seen a sharp increase in self-assessment tax mop up, which could be a result of the introduction of AIS and data collection from different source agencies," a government official told Mint.
Self-assessment tax grew 275 per cent to Rs 43,500 crore in the April-July period, while personal income tax collection stood at 38 per cent of the FY23 Budget target of Rs 7 lakh crore.
On the other hand, corporation tax collection was up by 32 per cent to Rs 2.2 lakh crore, against Rs 6.73 lakh crore of personal income tax.