India achieved a notable fiscal milestone in the financial year 2023-24 as net direct tax collections experienced a considerable rise of 17.7%, amounting to a total of ₹19.58 lakh crore, a figure that slightly exceeded the revised estimates for the year. This financial triumph was significantly bolstered by Personal Income Tax (PIT), which saw an increase in its share of the total tax collection to 53.3%, compared to 50.06% in the previous fiscal period, while the proportion accounted for by Corporate Taxes slipped to 46.5% from 49.6%.
Data provisionally released by the Finance Ministry on a recent Sunday disclosed that the boost in net tax collections during the closing fortnight of the financial year was primarily propelled by PIT and Securities Transaction Tax (STT) collections. In contrast, the net corporate tax collection experienced a marginal decline. Remarkably, the collections from PIT and STT expanded at nearly double the rate of Corporate Taxes during the past year.
On the 17th of March, it was recorded that net direct taxes had ascended 19.88% to ₹18.9 lakh crore. At that point, PIT and STT contributed to 51.4% of the total receipts, while Corporate Tax amounted to ₹9.14 lakh crore. However, by the end of March, the inflow from PIT and STT had surged by ₹73,000 crore, ultimately raising the full-year tally to ₹10.44 lakh crore.
While the gross Corporate Tax collections saw an increase from ₹10.98 lakh crore as of March 17 to ₹11.32 lakh crore by the end of the financial year, after accounting for refunds, the net receipts from corporates slightly decreased from ₹9.14 lakh crore on March 17 to ₹9.11 lakh crore.
The gross direct tax kitty for the year stood at a robust ₹23.37 lakh crore, signifying a growth rate of 18.5% over the ₹19.72 lakh crore collected in the preceding year, 2022-23. Gross PIT and STT receipts, which amounted to ₹12.01 lakh crore, rose by ₹76,000 crore between March 17 and March 31.
Prior to the refunds being issued, gross collections from PIT and STT saw an uptick of 24.3%, and gross Corporate Tax collections grew by 13.06% in 2023-24. Nevertheless, after refunds were adjusted, Corporate Tax receipts exhibited a growth of only 10.26% over the figures reported in the previous year. On the flip side, net receipts from PIT and STT soared by 25.33%, marking almost two and a half times the growth rate of corporate taxes.
In order to contextualize these numbers within fiscal expectations, the Finance Ministry underscored that: “The Budget Estimates (BE) for Direct Tax revenue in the Union Budget for 2023-24 were fixed at ₹18.23 lakh crore which were revised, and the Revised Estimates (RE) were fixed at ₹19.45 lakh crore. The provisional Direct Tax collections (net of refunds) have exceeded the BE by 7.40% and RE by 0.67%.”
Furthermore, the Ministry pointed out that the tax refunds dispensed in 2023-24 exhibited a 22.74% increase to ₹3.79 lakh crore, up from ₹3.09 lakh crore remitted in the previous fiscal year.
The fresh data demonstrates India’s burgeoning economy and the government’s adept handling of tax policies, leading to an increased reliance on direct taxation, particularly from personal incomes. The fiscal fortitude depicted by these figures holds promise for India’s path to economic resilience and sustainable growth. This successful overachievement of the set tax collection target also provides the government with additional fiscal room to maneuver policies in the upcoming financial year, potentially funding infrastructure, health, education, and social welfare programs with greater ease.
