Corporate tax receipts and advance tax payments support growth, while refunds rise 29.19% to Rs 2.20 lakh crore
Net direct tax collection rose 13 percent year-on-year to over Rs 12.12 lakh crore between April 1 and September 17 of the current financial year, with higher corporate tax receipts and advance tax payments supporting the increase.
According to data released by the Central Board of Direct Taxes (CBDT), gross direct tax collection before adjustment for refunds increased 15 percent to more than Rs 14.32 lakh crore during the period. The growth came even as tax refunds increased at a faster pace.
Net collections are calculated after deducting refunds from gross direct tax receipts. The difference in the growth rates of gross and net collections therefore reflects the impact of the higher refunds issued during the period.
Corporate tax collection grows faster
Corporate tax emerged as the faster-growing component of direct tax receipts during the period. Net corporate tax collection increased 19.48 percent year-on-year to around Rs 5.56 lakh crore.
Non-corporate tax collection, which includes taxes paid by individuals and Hindu Undivided Families (HUFs), rose 6 percent to more than Rs 6.16 lakh crore.
In absolute terms, non-corporate taxes continued to contribute a larger amount than corporate taxes. However, the significantly faster growth in corporate tax receipts points to the stronger contribution from companies to the overall increase in direct tax collections during the period.
Securities Transaction Tax (STT) also recorded a sharp rise. Collection from STT increased 53 percent to Rs 40,214 crore. Despite recording the fastest growth among the reported tax categories, STT collections remained considerably smaller in absolute terms compared with corporate and non-corporate tax receipts.
Refunds increase 29.19%
The rise in tax refunds was another notable feature of the collection data. Refunds increased 29.19 percent to more than Rs 2.20 lakh crore through September 17.
The increase in refunds was substantially higher than the 15 percent growth in gross direct tax collection. As a result, the growth in net direct tax collection was lower at 13 percent.
Based on the rounded figures released by CBDT, refunds accounted for roughly 15.4 percent of gross direct tax receipts during the period. The figures underline the difference between gross collections and the amount retained by the government after refunds.
Advance tax collection crosses Rs 5.22 lakh crore
Advance tax payments also contributed to the increase in direct tax collections. Total advance tax collection rose 16.18 percent to around Rs 5.22 lakh crore during the period.
Companies accounted for the larger share of these payments. Corporate advance tax receipts increased 18 percent to more than Rs 4.16 lakh crore, while non-corporate advance tax payments rose 9.24 percent to Rs 1.06 lakh crore.
Corporate taxpayers therefore contributed approximately four-fifths of total advance tax receipts during the period.
Advance tax is paid in instalments during the financial year based on a taxpayer’s estimated tax liability. It enables the government to receive tax revenue during the year instead of waiting for the final settlement of the taxpayer’s annual liability.
The latest collection data point to continued growth in direct tax receipts during the first part of the financial year, with corporate tax and advance tax payments making a significant contribution. At the same time, the sharp rise in refunds moderated the growth in net collections compared with gross receipts.
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