Direct tax collection rises 13.6% to Rs 7.43 trn in Apr-Dec, refunds up 17%

Refunds worth Rs 1.3 trillion paid during the period, 17% higher than previous year, reveals CBDT data

The government collected income tax revenue amounting to Rs 7.43 trillion in April to December 2018-19, 13.6 per cent higher than that collected in the same period of the previous financial year, the Central Board of Direct Taxes (CBDT) said in a release on Monday. 

Gross collection grew faster at 14.1 per cent, the reason, officials said, being faster payout of refunds. Refunds worth Rs 1.3 trillion were paid in April-December, 17 per cent higher than the previous year. As for advance tax, its collections grew 14.5 per cent over previous year to touch Rs 3.64 trillion. 

Available data suggests that collections of income tax in December could have possibly taken a hit. The net collection growth in April-November stood at 14.7 per cent, which has slowed down to 13.6 per cent in April-December. 

CBDT Chairman Sushil Chandra had communicated field tax officers last week to speed up recovery after data, when the collections from regular assessment were not found to be satisfactory. 

As a proportion of the annual target of Rs 11.5 trillion, the actual collection is 64.7 per cent of direct tax, marginally lower than the April-December collections in the last two years. 

Officials, however, said the January-March period is a recovery quarter, and the target would be met at the end of March. 

Part explanation of the higher growth in refunds can be attributed to low-base effect. Previous data shows that refund payout had contracted in the previous year, compared to 2016-17, creating a low-base effect for 2018-19. Refunds payout stood at Rs 1.26 trillion in April-December 2016-17, which contracted to Rs 1.12 trillion in April-December 2017-18, rising to Rs 1.3 trillion this year. 

As a result, net direct tax collection growth was 12.1 per cent in April-December 2016-17 and 18.2 per cent in April-December 2017-18. The growth rate reduced to 13.6 per cent in April-December 2018-19. 

Officials in the CBDT said the “extraordinary collections” in the last two years were assisted by measures such as the Income Declaration Scheme, 2016, which were not in place this time. 

“This year’s collection should be looked with that perspective. Despite the absence of special measures, the net collection has grown at above 13 per cent, which shows that budget target would be met,” a senior finance ministry official said.

Experts pointed out that the income tax collection figures show that revenue from direct taxes is on its course, and the last quarter push will boost the revenue further. 

“The last quarter of a financial year is when the recovery happens for assessments finished in December. Further, advance tax receipts also peak in March because of financial year ending,” said Neeru Ahuja, partner, Deloitte India. 

Data released by the CBDT shows that refunds pertaining to personal income tax (PIT) has been processed faster than those pertaining to corporate income tax (CIT). 

The growth gross CIT collection is 14.8 per cent, while that in net CIT collection is 16 per cent. For PIT, the growth in gross collection at 17.2 per cent is higher than the 14.8 per cent growth in net collection, the release said.