NEW DELHI: Net direct tax collection in FY25 (till 12 January 2025) increased by 16% to Rs 16.9 lakh crore, driven mainly by strong personal income tax (PIT) collection.
Personal income tax collections during the period surged 21.6% to Rs 8.74 lakh crore compared to Rs 7.2 lakh crore. Corporate tax collection has grown at 8.12% to Rs 7.7 lakh crore during the period compared to Rs 7.10 lakh crore.
The other component of direct taxes – Securities Transaction Tax (STT) – grew by a whopping 75% to Rs 44,500 crore during the said period compared to Rs 25,415 crore a year ago period. Refunds during the period increased by 42.5% to Rs 3.74 lakh crore.
For the current financial year (FY25), the government has a target of collecting Rs 22 lakh crore through direct taxes – Rs 11.2 lakh crore from personal income tax and Rs 10.2 lakh crore from corporate taxes. In the previous financial year, the government had collected Rs 19.6 lakh crore through direct taxes.
The central government may face challenges in achieving its tax collection targets for the current financial year – Rs 38.40 lakh crore -- owing to a slowing economy.
The government’s first advance estimate puts India’s real GDP growth at 6.4%, while the nominal gross domestic product growth at 9.7%, which is lower than the budgeted 10.5%.
According to Nomura, the advance estimates place nominal GDP growth at 9.7% for FY25, which is below the government’s budgeted projection of 10.5%.
“The increase in denominator arithmetically inches the FY25 fiscal deficit to GDP ratio up from the budgeted 4.9% of gross domestic product to 5.0% of GDP, although there will also be some additional drag from lower tax revenues that typically reflect the nominal GDP growth,” says Nomura in its report.
With the personal income tax collections exceeding the corporate taxes, there has been pressure on the government to lower the tax burden on individuals.
The government in its next budget is likely to offer a few tax sops to make the middle class happy.