Friday, Nov 27, 2020

–Govt source: See FY21 tax mop-up marginally lower than FY20 revised aim 
–May cut FY21 tax aim sharply after Dec advance tax 
 

By Adrija Chatterjee and Shubham Batra

NEW DELHI – The Indian economy may be showing signs of recovery, but tax collections in the current financial year ending March are likely to fall short by about 2.6 trln rupees, a senior finance ministry official said.

The Budget had projected tax collections in 2020-21 (Apr-Mar) at 24.23 trln rupees.

"It will be really good if our tax collections are as much as last year's revised Budget estimate. But, we are expecting it to be marginally lower than that," the official told Cogencis.

The revised Budget estimate for gross tax collection in 2019-20 was 21.63 trln rupees. If the total tax collections in 2020-21 reach the revised estimate level of last year, it will be a growth of 7.6% on year from 20.10 trln rupees raised in 2019-20.

The government's tax collections in Apr-Sep, the first half of 2020-21, contracted 21.6% on year to 7.21 trln rupees.

The official said with economic activity showing signs of a rebound in the past two to three months, the shortfall may not be as high as feared earlier.

The government's tax collections, which had plummeted in the initial months of 2020-21 because of the nationwide lockdown, have shown signs of improvement in the last few months.

According to Controller General of Accounts data, year-on-year contraction in tax collections have narrowed to 13.1% in Jul-Sep from 32.6% in Apr-Jun.

Latest data suggest that there is further improvement. Total goods and services tax collections in October grew 10.2% on year to 1.05 trln rupees in October. October was the first time in eight months that GST collections in a month crossed 1 trln rupees.

Cogencis had on Wednesday reported that the finance ministry expects overall GST collections in November to be around 1.08 trln rupees.

The finance ministry is likely to revise down its estimates on tax collections for 2020-21 after seeing the advance tax collections for December, the official said.

"There will be a revision done on our initial estimate and a big one at that," the official said.

Companies pay the third installment of corporate tax and non-salaried individuals pay the second installment of income tax on Dec 15.

Last year, the total tax collections were lower than the Budget estimate by a whopping 4.51 trln rupees.

In fact, the current year's Budget estimate for gross tax collection is about 380 bln rupees lower than the Budget estimate for 2019-20.  End

Edited by Shirsha Thakur

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