Direct tax collections may exceed budget targets, CBDT chief says

Gupta added that if the trend continues, direct tax collections for FY23 could exceed the budget target of Rs 14.20 trillion

The Centre’s direct tax collection as on August 30 stood at Rs 4.8 trillion, which is 33 per cent more than the Rs 3.6 trillion collected in the same period last year, Nitin Gupta, chairman of the Central Board of Direct Taxes (CBDT), told Business Standard.

Gupta said if the trend continued, direct tax collection for FY23 could exceed the Budget target of Rs 14.20 trillion.

“We have a healthy net collection after accounting for a higher refund outgo. There is a good buoyancy of tax collection so far,” Gupta said. “If this trend continues in the second instalment, we expect a fairly good tax collection over and above the targets laid down in the Budget,” he said.

Of the Rs 14.20-trillion target for FY23, Rs 7.2 trillion is expected from corporate tax and Rs 7 trillion from taxes on various incomes including personal income tax and securities transaction tax. In FY22, the direct tax Revised Estimates were Rs 12.5 trillion as against the Budget Estimates of Rs 11.08 trillion.

Gupta said corporate tax so far this year had been 25-26 per cent more than in the same period last year, a reflection of the healthier balance sheets and growing profitability of India Inc as it recovered from the pandemic-induced slowdown.         

Corporate earnings grew in double digits during April-June 2022. The combined net profits of 2,981 listed companies across sectors in the Business Standard sample were up 22.4 per cent year-on-year to Rs 2.24 trillion in the June quarter, driven by a big jump in the earnings of banks, non-banking lenders, oil and gas producers, and FMCG companies.

The CBDT chairman also spoke about healthy growth in securities transaction tax (STT) so far this year.

“STT collection to date has been around Rs 10,000 crore, growing around 7.7 per cent over that in the same period last year,” Gupta said.

The Centre is counting primarily on healthy direct and indirect tax collection this year to maintain its FY23 fiscal deficit target of 6.4 per cent of GDP at a time when its subsidy and welfare spending commitments have increased due to inflationary pressures and supply-chain disruptions caused by the war in Europe.

Goods and services tax (GST) collection remained above Rs 1.4 trillion for the sixth month in a row, the finance ministry said on Thursday.

GST collection increased 28 per cent year-on-year to Rs 1.43 trillion on better compliance, revival in consumption, and elevated inflation.

Speaking on other issues, Gupta said the department, along with the law ministry, was examining the recent Supreme Court judgment that quashed all benami cases before the amendments to the Benami Transactions (Prohibition) Act in 2016.

“The campaign against black money is a continuing campaign. We have been working very hard on it. And a lot of enforcement action is being taken. The law has been analysed by the honourable Supreme Court and we are analysing the decision. We will take an appropriate call after that,” Gupta said, adding that there was no data on how many cases would be affected by the judgment.

On August 24, the Supreme Court ruled on the validity of certain provisions of the Benami Transactions (Prohibition) Act, 2016, and quashed criminal proceedings for deals that took place between 1988 and 2016.

The three-judge Bench said all criminal prosecutions related to transactions from 1988 to 2016 would stand quashed.

This, the court said, was because the 2016 amendment could not be given retrospective effect. The law would operate prospectively, the court said.

Gupta said as of August 21, the number of tax-return filings for the assessment year 2022-23 had crossed 60 million.