Rs 6-trn direct tax collection rescues govt in fiscally difficult year

The fiscal deficit target faces pressure due to less growth in the gross domestic product than estimated in the Budget.

Amid fiscal worries, the government has got some relief on the direct taxes front. The mop-up rose 18.2 per cent till December. The target for this financial year is 15.7 per cent, according to Budget Estimates. 

The direct tax collections rose to Rs 6.56 trillion till December. This represents 67 per cent of the Budget Estimates of Rs 9.8 trillion.   

This would give some leeway to the government which faces uphill task to rein in its fiscal deficit at 3.2 per cent of the gross domestic product (GDP) due to subdued goods and services tax (GST), transfer  of surplus by the Reserve Bank of India and spectrum receipts. 

The government is looking at a shortfall of aboout Rs 500 billion from these heads. 

The fiscal deficit target also faces pressure due to less growth in the gross domestic product than estimated in the Budget.  

The first advance estimates for GDP gross domestic product growth in 2017-18, released on Friday, indicate that the fiscal deficit as a percentage of the nominal GDP will come in at nearly 3.3 per cent, as opposed to the target 3.2 per cent, even if the deficit is retained at budgeted number of Rs 5.46 trillion. 

Data released by the Central Statistics Office (CSO) showed that GDP at current prices is expected to grow to Rs 166 trillion from a provisional estimate of Rs 152 trillion in 2016-17.

The government had by November run up a fiscal deficit at 112 per cent of the target set out in the Budget for 2017-18. This is the highest deviation from budget estimates for the fiscal deficit in the first eight months of a fiscal year since 2008-09, the year of the global financial crisis.

Gross direct collections (before adjusting for refunds) have increased by 12.6 per cent to Rs 7.68 trillion during April to December, 2017. Refunds amounting to Rs 1.12 trillion have been issued during this period. 

An amount of Rs 3.18 trillion has been received as advance tax up to December, 2017 reflecting a growth of 12.7 per cent over the the collections in the corresponding period of the previous year. The growth in corporation advance Tax is 10.9 per cent and that in personal income tax was 21.6 per cent.