Advance Tax Collections Surge by 21%, Direct Taxes by 18% in India

Advance tax collections in India have witnessed a substantial increase of nearly 21%, reaching over Rs 3,55,481 crore, according to data released by the Central Board of Direct Taxes. This surge in collections indicates a significant pick-up since the first installment was paid in mid-June. Additionally, gross direct tax collections have seen an impressive 18.3% rise, amounting to Rs 9,87,061 crore.

Key Highlights

• Advance tax collections have surged by approximately 21%, demonstrating robust economic activity in the country.
• The initial installment paid in mid-June showed a 13.7% increase, setting the stage for continued growth.
• Corporation tax collections are estimated at Rs 2.8 crore, reaffirming the positive outlook for the corporate sector.
• Taxpayers with an annual tax liability of Rs 10,000 or more during a financial year are required to pay advance tax in four installments, with the second installment due by September 15.

Positive Implications The data released by the Central Board of Direct Taxes highlights the following positive implications:

1. Buoyant Gross Direct Tax Collections: There has been an 18.3% increase in gross direct tax collections, primarily driven by advance tax payments. These advance tax payments account for over 35% of the collections so far in the financial year.
2. Robust Net Direct Tax Collection: After factoring in refunds issued during the financial year up to September 16, net direct tax collection has surged by 23.5% to exceed Rs 8,65,117 crore. This substantial increase puts net collections at 47.5% of the full-year budget estimates of Rs 18.2 lakh crore.
3. Government’s Fiscal Target: The government aims to meet the fiscal deficit target of 5.9% of GDP through healthy tax growth, especially considering lower-than-expected disinvestment receipts. The fiscal goals will be partially achieved through higher dividends from public sector banks and the Reserve Bank of India (RBI).

Expert Insights Experts have noted the following key points:

• Encouraging Direct Tax Collections: Direct tax collections are viewed as encouraging, aligning with the budgeted estimates for the fiscal year 2023-24.
• Diverse Revenue Sources: The marginal increase in overall tax collections is remarkable, especially considering less-than-projected growth in corporate taxes. This reflects a shifting mix of tax revenue sources and highlights the impact of administrative reforms and digitalization processes adopted by both taxpayers and tax administration.
• Economic Resilience: The significant rise in advance tax collections signifies the resilience of the Indian economy and its ability to generate substantial tax revenue.

Conclusion India’s advance tax collections and direct tax revenues have surged significantly, indicating a positive economic outlook and contributing to the government’s fiscal objectives. The increase in tax collections, despite challenges, underscores the country’s commitment to economic growth and fiscal stability.