Net direct tax mop up increases 19.1%

Net direct tax mop up increases 19.1%

Context                            

Personal income tax collection net of refunds rise 15.7%, net corporate tax 23.2%, official data show

Introduction:

• Net direct tax collections up to July 2017 in the current financial year stood at Rs 1.90 lakh crore or 19.1% higher than in the corresponding period of the previous year, according to official figures.
• Within this, net personal income tax grew 15.7% and net corporate tax 23.2% over the year earlier period, the data showed.
• In comparison, growth in net direct tax collections up to July 2016 in the previous financial year stood at 24% while growth in personal tax collections was 46.5% and corporate tax collections 2.84%.

Reason:

•   The slowdown in the overall economy as well as the impact of a high growth base last year could be the factors responsible for slower growth in direct tax inflows.
• Last year, there was an out of line growth, and measured against that, this year’s number would show lower growth.

Key points:

•  Direct tax collections up to July 2017 in the current financial year 2017-18 continue to register steady growth, the government said in a release
•  So far, as the growth rate for corporate income tax (CIT) and personal income tax (PIT) in terms of gross revenue collections is concerned, the growth rate for CIT is 7.2% while that for PIT is 17.5%, the release added.
•  Slowdown in personal tax collections could also reflect a slowdown in small business activity, since salary income tends to grow from year to year.
•         As the growth rate for corporate income tax (CIT) and personal income tax(PIT) in terms of gross revenue collections is concerned, the growth rate for CIT is 7.2% while that for PIT is 17.5%, the release added.