A new direction for direct taxes

The recent focus on direct taxes must be complemented with an analysis of what is causing the slowdown in their collections

The latest data on the government’s direct tax collections should cause some disappointment. In the first four months of the current financial year, direct tax collections have fallen by 0.91 per cent, in contrast to the Budget’s projection of an 11.36 per cent growth for the full year.

There was a bit of a surprise as well in these numbers. India Inc had reported healthy profit for the first quarter of 2023-24. However, corporation tax collections for the April-July period of 2023 fell by 10 per cent. Personal income-tax collections did grow by 6.6 per cent, but this was quite underwhelming,