Economy

Tax receipts surge 34% to exceed ₹27 lakh cr., beat Budget target

Tarun Bajaj.

Tarun Bajaj. | Photo Credit: Kamal Narang

India’s gross tax revenues surged 34% in 2021-22 to exceed ₹27 lakh crore, lifting the tax-to-GDP ratio to an at least 23-year high of 11.7% , from 10.3% in the previous year, Revenue Secretary Tarun Bajaj said on Friday.

The tax collections were ₹5 lakh crore more than the Budget estimates for 2021-22, and even surpassed the revised estimates by ₹1.87 lakh crore, with direct taxes shooting up 49% and indirect taxes climbing by 20%.

“When we started the year, the Budgeted estimate was ₹22.17 lakh crore, 17% higher than the previous year,” Mr. Bajaj said. “We are now close to ₹27.07 lakh crore, an increase of almost ₹5 lakh crore. These figures are tentative at the moment and they are likely to change and I hope that is on the upside, not the downside,” he added.

Corporation tax collections rose by 56.1% and personal income tax grew about 43%, vaulting overall direct tax growth to 49%, which the Revenue Secretary said was the ‘highest in a long time’.

“The Customs duty collections went up by 48%, as reflected in our robust export-import data, while excise duty collections have actually contracted 0.2% and the Central GST, which was a challenge for us, has grown by almost 30%,” Mr. Bajaj said.

“Commentators have said India’s tax-to-GDP ratio is very low. It was 10.3% in 2020-21 and has gone up to 11.7%, the highest since at least 1999. Direct taxes are 6.1% of GDP, and indirect taxes are 5.6%. So the criticism we faced last year, that our indirect taxes are higher than direct taxes, has also been” addressed, he emphasised.

The Finance Ministry, in a statement, said the tax-GDP ratio was the ‘highest’ and the tax buoyancy ratio was ‘very healthy’ at 1.9. The tax buoyancy ratio, which measures growth in taxes relative to GDP growth, was 2.8 for direct taxes and 1.1 for indirect taxes in 2021-22. The ratio of direct to indirect taxes recovered from 0.9 in 2020-21 to 1.1 in 2021-22.

“This revenue growth has been propelled by rapid economic recovery after successive waves of COVID, supported by one of the largest immunisation programmes of the world run by the Government,” the finance ministry said, adding that the revenues signalled a ‘robust recovery’ and were supplemented by better compliance efforts.  

ICRA chief economist Aditi Nayar said a large portion of the upside in revenues was shared with the States. “The actual tax devolution to the State governments in 2021-22 stood at ₹8.8 lakh crore, a considerable ₹1.4 lakh crore higher than the revised estimates (RE). After removing payments related to past arrears, the aggregate devolution to States has overshot the RE level by about ₹95,000 crore,” she noted.


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Printable version | Apr 8, 2022 10:00:58 pm | https://www.thehindu.com/business/Economy/tax-receipts-surge-34-to-exceed-27-lakh-cr-beat-budget-target/article65303267.ece