India’s Finance Ministry recently released provisional data on the country’s tax collections for the fiscal year 2022-23. The data shows that India’s net direct tax collections have increased by 17.63% to reach ?16.61 lakh crore, exceeding the revised estimates target for the year by 0.7%. Gross tax collections also grew by 20.33% to ?19.68 lakh crore in the same period, compared to ?16.36 lakh crore in the previous financial year.
Corporate Tax vs Personal Income Tax and Securities Transaction Tax
Corporate tax contribution to the gross direct tax was ?10.04 lakh crore, just slightly higher than the ?9.61 lakh crore paid by taxpayers as personal income tax and Securities Transaction Tax (STT). However, the growth in corporate tax collections was lower than that of personal income tax and STT, which yielded a growth of 24.23%. Gross corporate tax collections had only increased by 16.9% in the same period.
Gross Tax Collection Breakdown
At a gross level, the share of personal income tax and STT to the tax kitty has touched 48.9% in 2022-23 compared to around 47.4% in 2021-22, while corporate tax accounted for just 51.1% in the year gone by as opposed to 52.6% in 2021-22. Gross corporate and personal tax collections along with STT registered a 20.38% growth from ?16.32 lakh crore to ?19.65 lakh crore. Tax refunds also jumped by 37.4% year-on-year to a little over ?3.07 lakh crore from ?2,23,658 crore in 2021-22.
Reasons for the Increase in Tax Collections
The increase in tax collections can be attributed to several factors, including the incorporation of data accumulation tools by the tax department that lead to taxpayer data being pulled and automatically adjusted. Additionally, the expansion of tax deduction and tax collection at source (TDS and TCS) provisions helped track transactions from the source through the value chain, which resulted in better tracking and increased tax collections. The implementation of the Goods and Services Tax (GST) also helped to increase the tax base.
Understanding Revised Estimates and Gross Direct Tax
Revised estimates are prepared after conducting a survey of the allocations for the financial year. This survey takes stock of how much of the allocated funds have been used, how much is left/collected, and what activities have been planned, among other things. After this, the initial budget estimates are revised, and these numbers are now called revised estimates. Gross direct tax refers to the total amount of tax collected before refunds are given. Net tax collection is gross tax collection minus refunds.
Why In News
The Finance Ministry of India recently published provisional data for the fiscal year 2022-23 tax collections, revealing a 17.63% increase in net direct tax collections to reach ?16.61 lakh crore, surpassing the revised estimates target for the year by 0.7%. This notable rise in tax collections can be attributed to various factors, such as the incorporation of data accumulation tools by the tax department, the expansion of tax deduction and tax collection at source provisions, and the increase in tax base through the implementation of GST.
MCQs about Rise in Tax Refunds in India’s FY 2022-23 and Its Implications
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What is the percentage increase in India’s net direct tax collections in FY 2022-23 as per provisional data released by the Finance Ministry?
A. 16.36%
B. 17.63%
C. 19.68%
D. 20.33%
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What was the contribution of corporate tax to gross direct tax in FY 2022-23?
A. ?9.61 lakh crore
B. ?10.04 lakh crore
C. ?16.61 lakh crore
D. ?19.68 lakh crore
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What was the growth in gross corporate tax collections in FY 2022-23?
A. 16.9%
B. 20.33%
C. 24.23%
D. 37.4%
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What are some reasons for the gains in India’s tax collections in FY 2022-23?
A. Incorporation of data accumulation tools
B. Expansion of tax deduction and tax collection at source provisions
C. Increase in tax base through implementation of GST
D. All of the above
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