Even as government pats itself on the back for 71 per cent surge in the number of income tax returns (ITRs) filed upto August 31 this year, the direct tax collection data released by CAG paints an uninspiring picture.
The national auditor’s data suggests that direct tax collections grew by a measly 6.6 per cent during April-July of the current financial year against the Budget target of 14.4 per cent for 2018-19, reported Business Standard.
In what could be a double whammy for this government, corporation tax collections grew at just 0.57 per cent, the lowest in the first four months in at least seven years. Corporation taxes are budgeted to rise 10.15 per cent to Rs 6,21,000 crore in this fiscal year against Rs 5,63,745 crore in the previous year.
“This (subdued direct tax collections) was probably due to higher refunds,” ICRA principal economist Aditi Nayar told the daily.
Direct tax collections sluggish despite rise in IT return filings
Surprisingly, a dent in direct tax revenues comes after robust corporate earnings in Q1 of FY19. It is estimated that the tax department refunds of Rs 75,000 crore in the first four months of the current financial year is half of what was refunded in the entire FY18.
Meanwhile, personal income tax collections increased by 11.3 per cent in April-July period, also a three-year low in the first four months. Personal income tax is budgeted to grow 19.8 per cent at Rs 5,29,000 crore in FY19 compared to Rs 4,41,255 crore.
Lower direct tax receipts were one of the main reasons for the government overshooting its revenue deficit target for the entire year by 6.3 per cent in just first four months, the report added.
Earlier, Finance Minister Arun Jaitley had said that the total number of income tax returns filed upto August 31, 2018 has shown remarkable growth of 71 per cent crossing 5.42 crores as against 3.17 crore compared to the corresponding period in the preceding year.
The rise in ITR filings was seen in two particular categories i.e. ITRs filed by salaried Iindividuals (ITR-1& 2) as also those availing the benefit of the Presumptive Taxation Scheme (ITR-4).
The total number of e-returns of salaried individual taxpayers filed till August 31, 2018 increased to 3.37 crore from 2.19 crore returns filed during the corresponding period of 2017, registering an increase of 1.18 crore returns translating into a growth of almost 54 per cent, the Finance Ministry had said last week.