HYDERABAD: Gross direct tax collections shot up an unprecedented 112% in Q1, FY22 over the previous year, according to official data.Even when pitted against the pre-pandemic period, tax collections rose by 48% over Q1, FY20. Direct taxes include corporate taxes, personal income taxes and securities transaction tax (STT).
This is perhaps the fastest growth recorded in decades and also a first in 20 years when 26.7% of the Budget target was met in the first quarter. In the past, despite elevated economic growth rates, first quarter collections never surpassed 18% of the annual Budget target ever.
According to the Ministry of Finance, as on June 15, gross direct taxes (before adjusting for refunds) stood at Rs 2.16 lakh crore. This includes corporate taxes at Rs 96,923 crore and income taxes (plus STT) at Rs 1,19,197 crore. But by June 30, gross direct tax collections touched Rs 2,53,097 crore, translating to an average mop-up of Rs 2,433 crore per day throughout the fortnight since June 15.
In fact, personal taxes, which overtook corporate tax collections last fiscal -- a first in 12 years -- took a back step in Q1 of current fiscal, though the correction is not huge. As on June 30, corporate tax collections stood at Rs 1.23 lakh crore, while personal income taxes (including STT) printed at Rs 1.22 lakh crore.
Typically, corporate taxes pick up pace in the second half of the financial year, while personal income taxes hold the fort during the first quarter. For instance, six out of the past 10 years, income taxes were higher than corporate tax collections during Q1. That trend, however, was overturned in the current fiscal with corporate taxes raking in more dough.
Meanwhile, gross tax revenue (direct and indirect) in Q1 stood at Rs 5.31 lakh crore, registering a staggering 97% increase over the corresponding period last year. Similarly, the Centre’s net tax revenue (after adjusting for state transfers) stood at Rs 4.1 lakh crore, translating to an eye-popping 206% increase over last year. Experts believe that if the pace of direct and indirect tax collections continues, the government may well exceed the FY22 tax target of Rs 22.2 lakh cr.