Finance Minister Arun Jaitley on Wednesday said that the government will end this year with higher revenues for both direct and indirect taxes compared to the budget estimates. This is crucial in view of the trend during the last few years when the government’s direct tax collections fell substantially short of the initial budget estimates.
The higher tax revenues are expected to balance the divestment shortfall and help the government stick to its fiscal deficit target of 3.5 percent of gross domestic product in 2016-17.
In the first eight months of this financial year (April to November 2016), indirect tax collections, which includes central excise, service tax and customs, were up 26.2 percent to Rs 5.52 lakh crore over the full year target of approximately 11 percent. Similarly, excise duty collections increased 43.5 percent during April-November to Rs 2.43 lakh crore against the budget estimates of 12.15 percent rise.
Service tax collections were also up by 25.7 percent at Rs 1.6 lakh crore over the same period of eight months, while customs collections rose by 5.6 percent to Rs 1.48 lakh crore in the first eight months against the budget estimates of 9.78 percent increase in FY17.
Against the projected 18.1 percent rise, personal income tax yielded 23.9 percent more till December 19. On direct taxes front, collections were already up 13.6 percent, after factoring in the refunds, until December 19 against an estimated increase 12.5 percent. Growth in corporate tax collection remained more or less same at around nine percent for the full year.
The government had budgeted for Rs 8.47 trillion in direct taxes and Rs 7.79 trillion in indirect taxes in the current fiscal year.
Tax revenues have been upbeat on account of the government’s additional revenue mobilisation measures such as the income disclosure scheme, which is expected to get at least Rs 15,000 crore in taxes in 2016-17.