Tax Revenue For FY22 Surpasses Targets
India’s gross tax revenue for the last fiscal surpassed budget and revised estimates, indicating a steady economic recovery.
The provisional tax revenue stood at Rs 27.07 lakh crore for FY22, Revenue Secretary Tarun Bajaj told the media on Friday. That’s 34% higher than the collections in FY21.
The budget and revised estimates for FY22 were at Rs 22.17 lakh crore and Rs 25.16 lakh crore, respectively.
Also, the tax-GDP ratio of 11.7% in FY22, according to Bajaj, was the highest in since 1999. Of this, the contribution of direct tax was at 6.1% and indirect tax was at 5.6%.
Tax buoyancy, which tracks growth in tax revenue against GDP growth, is at 1.9—with 2.8 for direct taxes and 1.1 for indirect taxes.
The direct tax increases in FY22 include:
Corporate tax growth: 56.1%
Personal income tax growth: 43%
Overall direct tax growth: 49 %
The indirect tax increases in FY22 include:
Customs duty: 48%
Union excise: no change
Central GST: 30%
Overall indirect tax growth: 20 %
According to CBIC Chairman Vivek Johri, customs duty collections included major contributions from items like gold, edible oil, mobile phones and motor vehicles. Infrastructure items such as iron, steel, cement have also afforded good GST revenue to the government, along with revenue from the IT sector, he said.
The gross corporate taxes in FY22 stood at Rs 8.6 lakh crore against Rs 6.5 lakh crore a year ago, after adoption of the new tax regime that offers lower rates and no exemptions.
‘No Deviation From Fiscal Deficit’
ICRA’s chief economist Aditi Nayar said a large portion of the additional revenue was shared with states.
The government devolved Rs 2.4 lakh crore to the states in February, including Rs 43,170 crore towards net devolution arrears that were due to states for the period FY1997-FY2018. Subsequently, the centre devolved an additional Rs 95,082 crore to the states in March.
“The actual tax devolution to the state governments in FY22 stood at Rs 8.8 lakh crore, which is Rs 1.4 lakh crore higher than the FY22 revised estimates.”
On adjusting for payment related to arrears for past years, the aggregate devolution to states in FY22 has overshot the revised estimate level by Rs 95,000 crore, she said. The revised estimates of the devolution to states in FY22 was Rs 7.4 lakh crore.
Nayar assess a net cushion of Rs 20,000 crore in the fiscal after considering dividend payouts and pre-payment by few telecom operators, devolvement to states and the shortfall in disinvestments receipts due to the postponement of the LIC IPO.
We expect capex to have undershot the FY22 revised estimates by Rs 600 billion (Rs 60,000 crore). This suggests a total buffer of Rs 0.8 trillion (Rs 80,000 crore) for higher revenue expenditure, which is smaller than the size of the third supplementary demand for grants (Rs 1.1 lakh crore). Overall, we do not expect the FY22 fiscal deficit to deviate meaningfully from the revised estimates.Aditi Nayar, Chief Economist, ICRA
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