Gross Direct Tax Collection Reported a 13% Drop & Net Collections Climbed 39%

As per the recently released Government reports and statements a 13% drop has been reported in Gross Direct Tax These types of taxes are directly imposed and paid to the government of India. Example of Direct Tax is Income Tax, TDS, Securities Transaction Tax, Fringe Benefit Tax, etc collection in this year up to May 23, 2020, as compared to the reports of the same period of last year. The drop and Economic disruption have been caused by the COVID-19 pandemic situation. However, due to the decline in the refund distribution by the tax department, there is a huge spike in net collections, which climbed 39% during this period. The Gross tax collections reached Rs 91,646 crore between April 1 and May 23, which was Rs 1.05 trillion in the same period of the Financial year 2019-2020. Whereas the Rs 16,242 crore as refunds has been issued during this period, which was Rs 51,655 crore in the same period of last year, It shows a 68% fall.

The Government Officials said that “Collections from direct taxes have been dismal, but with lower refunds, the net revenue position of the government is fairly positive at the moment. However, with even the central bank talking of negative growth this fiscal year, we have to relook the Budget targets,”. They also added that “the revenue collection estimate should be in line with the GDP growth forecast”.

Officials also shared their worry that the net collection is expected to come under pressure in the upcoming months when the base effect wears off due to the pandemic and economic crisis. On Friday RBI also said that India’s GDP growth The biggest tax reform i.e. Goods and Services Tax is now a part of Indian Economy. A new and unified tax structure is followed for indirect taxation on the place of various tax laws like Excise duty, Service Tax, VAT, CST etc. Read more is expected to be in negative territory in Financial Year 2020-21, due to the disruption in financial activity.

The tax department missed the revised target for direct tax collections for Financial Year 2020 by Rs 1.42 trillion. To achieve Rs 10.27 trillion, which is a 9% yearly fall. A boost of 28.2% will be required to achieve the collection target of 13.29 trillion, meanwhile, the projected rate in the budget is 12.2%. Additionally, the refund of around Rs 52,491 crores is pending in around 40000 cases. These cases are either under investigation or scrutiny or pending at AO. Out of these 52,491 crores, the refund of Rs 36,155 crores are pending in cases of scrutiny. Refunds of around Rs 16,336 crore are pending at AO.

A government official said that “There has been no administrative instruction to clear refunds in cases picked up for scrutiny, or those pending at the assessing officers’ end,”. Revenue collection from TCS also dropped to 22% as of May 10, which was the last day for TDS payments Get to know TDS online payment procedure and due dates for the current assessment year. Also, we have mentioned details of TDS forms, TDS return filing, And this stats indicating the massive layoffs and pay cuts in the month of April 2020.

In last year between May 1, to May 10 the TDS collection was Rs 56,447 crore but this year it is settled to Rs 44,110 crore only in the same period. The Financial Year 2020-2021 revenue estimation was based on an assumed nominal GDP growth rate of 10%, meaning a tax jump of 1.2. The Economic Survey had estimated the GDP growth at 6.0–6.5% for Financial Year 2020-2021, which seems elusive now. Whereas, the IMF in its World Economic Outlook report has cut India’s growth forecast for Financial Year 2020-21 to 1.9% which was estimated 5.8 percent in January.