Government sources anticipate that the current robust trend in direct tax and GST collections will likely persist, potentially surpassing the Budget Estimate by a significant margin in the fiscal year 2023-24.
However, these projections stem from the initial evaluations conducted as part of the government’s pre-budget procedures. A more definitive outlook is contingent upon forthcoming data, including advance tax payments for the third quarter in December and GST collections spanning April to December. Simultaneously, as policymakers convene for pre-budget discussions at North Block, they continue to evaluate tax collection forecasts for the following fiscal year, 2024-25.
Concerning GST, authorities project a 13-14% year-on-year growth in collections, with an estimated monthly average reaching Rs 1.7-1.8 trillion in 2024-25. Notably, October witnessed a collection of Rs 1.72 trillion, marking the second-highest monthly collection after April’s Rs 1.87 trillion. The average monthly GST collection for this fiscal year ranges between Rs 1.6 trillion and Rs 1.65 trillion.
According to a source, these promising figures are attributed to various policy measures and strategies implemented by the revenue department in recent months, which are expected to be fully reflected in the upcoming fiscal year. Combining both direct and indirect taxes, the gross collection is forecasted to grow by 10.45%, reaching Rs 33.61 trillion in 2023-24.
The government has set forth a forecast of a 10.5% increase in revenues from both corporate and individual income tax, aiming to reach Rs 18.23 trillion in the ongoing fiscal year. Additionally, GST collection is anticipated to surge by 12% to touch Rs 9.56 trillion.
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The expectations for robust GST revenue in the upcoming year, largely hinge on this year’s impressive collection, contingent upon the economic performance, given that GST operates as a transaction-based consumption tax.
Regarding direct taxes, a 10.1% year-on-year increase in gross collection and an 11.1% rise in net collection are expected in 2023-24. The revenue from corporation and personal income tax is estimated to elevate by 11.7% and 11.4%, respectively. Tax buoyancy, surpassing an index of 1 (higher than economic growth), will persist due to the formalization of the economy, enhanced compliance, and data integration.
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However, the tax projection considers multiple factors for assessment. Despite subdued growth in the initial months of the current fiscal year, corporation tax collection witnessed a 27% year-on-year surge in September 2023, supported by robust advance tax inflows, nearly 49% of the Budget Estimate (BE) for the year.
Personal income tax collection is approaching the BE. Cumulatively, the direct tax collections achieved thus far in the current year account for 53% of the estimated total for 2023-24. With the economy anticipated to grow over 6% and the implementation of various compliance measures and data integration between GST and income tax, robust tax buoyancy is expected to be maintained.
“The current revenue should offer some support to government spending, potentially influenced by the likely extension of the Pradhan Mantri Garib Kalyan Anna Yojana.” Sources have expressed concerns about excise duty, especially if the current trend persists.
Meeting the excise estimate could pose a challenge, especially considering that post-GST, excise duty is primarily levied on petroleum and other goods. Conversely, achieving the Customs target for the financial year shouldn’t present significant difficulties.
