Direct tax to GDP ratio in FY24 likely to be the highest since FY01

Tax buoyancy measures change in tax growth as a result of GDP expansion. Buoyancy at more than one means the GDP growth rate has led to a higher increase in tax receipts

On the back of robust tax collection, the ratio of direct taxes to gross domestic product (GDP) this financial year is likely to be the highest in this century so far.

This, along with strong goods and services tax (GST) collection, may drive up receipts from central taxes as a proportion of GDP to the highest level or close to the highest since 2008-09 despite subdued excise and customs duty receipts.

This will be due also to lower nominal GDP projected in the first advance estimates for 2023-24.

Ratings agency ICRA has estimated direct tax collection will overshoot the Budget Estimates (BE) by