NEW DELHI: Despite a challenging year, the central government has seen its net tax collections going up in 2020-21 largely on account of high excise duties and higher cess collections.The finance minister informed parliament on Monday that the central government’s net tax collection rose 5% to Rs 14.24 lakh crore in 2020-21 compared to Rs 13.57 lakh crore in the previous year. The increase was mainly on account of sharp increase in collections from excise duty and cesses on petroleum products.
Net tax collection is arrived after reducing states’ share from the gross tax collection. The central government shares 42% of its taxes (excluding the cesses) with the states.While total excise duty collection (including cesses) was Rs 3.9 lakh crore in 2020-21, a 60% jump over previous year, different cesses on petroleum products accounted for almost Rs 2.4 lakh crore of that. In 2019-20, total collection from cesses on petroleum products accounted for only Rs 1.4 lakh cr.
The Centre does not share with states the amount collected as cess, and therefore, a higher cess collection comes at the cost of states revenue. The states’ share from the Centre’s tax pool further dropped by 8.5% to Rs 5.95 lakh crore in 2020-21. In 2019-20, the states’ share of taxes had shrunk 14.5%.Collections from income tax surpassed those from corporate tax in the last financial year, for the first time in 20 years. The government mopped up Rs 4.86 lakh crore from income tax against Rs 4.57 lakh crore from corporate taxes.
States’ share drops
Net tax collection is arrived after reducing states’ share from the gross tax collection
While total excise duty collection (including cesses) was Rs 3.9 lakh crore in 2020-21, a 60% jump over previous year, different cesses on petroleum products accounted for Rs 2.4 lakh crore of that