There are various reasons for the country’s record direct tax collections, but the increase can mostly be credited to the government’s income tax (IT) changes and the country’s economic strength. Thanks to a strong advance tax mop-up in the last quarter, the government’s direct tax revenues for FY22 exceeded the revised forecasts by 1.13 lakh crore.
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Reasons behind Robust Direct Tax Collections
- As the Russia-Ukraine crisis and rising energy prices threaten to destabilize the government’s budget, this will provide it more flexibility.
- As of 16 March 2022, direct tax receipts, which include corporation tax and personal income tax. In addition, they are net of refunds, were 13.63 lakh crore, up 9% from the FY22. The revised estimate of 12.5 lakh crore was given last month (i.e Feb 2022).
- CBDT chief J B Mohapatra told news agency PTI that fears about the status of the economy. This had been pummeled by the Covid-19 pandemic, was unfounded. Because the economy “performed so well” and “corporates came out so well (in paying taxes)”. This is during the current fiscal year 2021-22.
- The direct tax collection, which primarily consists of personal income tax and corporation tax revenue receipts, will continue on its current path, and the department will be able to meet its target of collecting Rs 14.20 lakh crore in taxes in the next fiscal.
- It will be difficult to predict how things will turn out in the coming year. But there is no reason to believe that good times would last only four quarters of the year.
- The strength of the Indian economy, reforms in the IT department, and different policy measures. They are adopted overtime in and outside the Budget. Also, they are among the primary reasons for the record collections, according to the CBDT chief.
- Direct tax collections are up 48% year over year after the fourth-quarter advance tax payments.
- Mumbai had the greatest collections, with 4.5 lakh crore, up 48 percent from the previous year. Bengaluru, Delhi, and Chennai all saw a 44 percent, 38.1 percent, and 48 percent increase indirect tax filing in India, respectively.
Advance tax is paid in four installments when the money is generated. It is rather than at the conclusion of the fiscal year. Gross direct tax receipts (before refunds) totaled Rs 15.5 lakh crore, up 38%. It ranges from Rs 11.2 lakh crore in the previous fiscal year. Refunds declined 7.42 percent to Rs.1.87 lakh crore this year, down from Rs.1.87 lakh crore the previous year. Apart from all of this intel from the income tax world Tax Help desk offers the best online bookkeeping services in India and also the most reliable income tax and GST consultation services.
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