With all major tax heads yielding revenues significantly higher than the respective revised estimates (REs) shown in the Budget, the Centre has appropriated an additional Rs 78,000 crore as net (post-devolution) tax revenue in FY21. This means if other inflows and outflows stick to Budgeted numbers, the fiscal deficit for the year could be 46 basis points lower than budgeted 9.5% of the nominal gross domestic product (GDP), if one goes by the second advance estimate of national income.
According to two statements issued by the finance ministry this month, gross tax receipts (GTRs) – net of refunds but before transfers to the states – in the last financial year were up Rs 1.22 lakh crore or 6.4% over the RE at Rs 20.16 lakh crore. In FY20, GTR saw a rare decline – the collections in the year were Rs 20.04 lakh crore compared with Rs 20.76 lakh crore in FY19.
FE has estimated net receipts (post-devolution) in FY21 at Rs 14.2 lakh crore, up 5.8% over RE and 4.8% higher than such receipts in FY20.
The year-on-year growth in tax collections in FY21 is a remarkable feat given the rarity of an economic contraction in the year (nominal GDP is seen to have shrunk 3.8% in the year).
Of course, a large part of the growth in tax revenue is attributable to the steep hike in assorted taxes (excise/cess) on petrol and diesel, but improved buoyancy is visible across other taxes like GST, Customs and personal income tax. Excise revenue in FY21 was up a steep Rs 1.23 lakh crore over the Budget Estimate and nearly Rs 30,000 over RE. Even corporate tax revenue exceeded the RE level by Rs 11,000 crore.
According to a finance ministry statement on Tuesday, “The provisional figures for indirect tax collections for the Financial Year 2020-21 show that (post-refunds, pre-devolution) revenue collections are at Rs 10.71 lakh crore compared to Rs 9.54 lakh crore for the financial year 2019-20, thereby registering a growth of 12.3%”.
The indirect tax (pre-devolution) break-up is as follows: Customs collections stood at Rs 1.32 lakh crore in FY21 compared to Rs 1.09 lakh crore during the previous financial year, a growth of around 21%. Central Excise stood at Rs 3.91 lakh crore in FY21 compared to Rs 2.45 lakh crore in the previous year, up a solid 59%. GST collections (CGST+IGST+compensation cess) during 2020-21 were Rs 5.48 lakh crore, up 6% over RE but 8% lower than the collections in FY20.
“The GST collections were severely affected in the first half of the financial year on account of Covid. However, in the second half, the GST collections registered a good growth and collections exceeded Rs 1 lakh crore in each of the last six months. March saw an all-time high of GST collection at Rs 1.24 lakh crore… Several measures taken by the central government helped in improving compliance in GST,” the ministry added.
The Centre collected Rs 9.45 lakh crore as direct taxes (post-refund, pre-devolution) in 2020-21, up Rs 40,000 crore or 4.4% from the RE. Had the government not been liberal with refunds – up Rs 78,000 crore or 42% on year at Rs 2.61 lakh crore – the collections would have been even higher.
Source : Times of India