Building on the strong show seen in financial year 2023-24, Net Direct Taxes collections have surged 19.54 per cent to ₹ 5.74-lakh crore till July 11 this fiscal, official data released by CBDT showed.
In the same period (upto July 11) last fiscal, the net direct tax collections stood at ₹4.80-lakh crore.
The latest reading of ₹5.74 lakh crore includes Corporate Income Tax (CIT) at ₹2.1-lakh crore (net of refund); Personal income tax (PIT) at ₹3.46-lakh crore and Securities Transaction Tax (STT) at ₹16,634 crore (net of refund).
While CIT has jumped 12.47 per cent, PIT has seen robust growth of 21.41 per cent till July 11 this fiscal.
What is noteworthy is that the latest data release from the Central Board of Direct Taxes (CBDT) comes just ten days before the Modi 3.0 government will present a full fledged Budget on July 23.
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The latest performance is expected to bolster Centre’s fiscal consolidation efforts for the current fiscal and may prompt to peg the fiscal deficit in full Budget at lower than the 5.1 per cent target projected for 2024-25 in the recent interim Budget, say economy watchers.
The latest direct tax collection performance comes on top of Centre’s net direct tax collections jumping 17.7 per cent in 2023-24 at ₹19.58-lakh crore (₹16.64-lakh crore). Tax collections (at Revised Estimate stage) for 2023-24 were fixed at ₹19.45-lakh crore. So, the actual collections for 2023-24 surpassed the RE by ₹13,000 crore.
In the interim Budget, the Budget Estimate for PIT in 2024-25 is estimated at ₹11.56-lakh crore, up 13.1 per cent over RE (Revised Estimate) 2023-24. In the case of CIT, the BE for 2024-25 has been pegged at ₹10.43-lakh crore, a growth of 13 per cent over RE 2023-24.
The outstanding performance in direct tax collections, fuelled by 7-8 per cent economic growth, has raised expectations that Finance and Corporate Affairs Minister Nirmala Sitharaman will offer personal income tax relief in the upcoming Budget. This potential relief comes as a welcome move for the common man, who has been burdened in recent years by high direct and indirect tax rates and the Centre’s reluctance to cut petrol and diesel duties.
In recent years, the only meaningful adjustment (relief) to tax rates came on the corporate tax front, when the Centre in September 2019 announced a cut in base corporate tax for the then existing companies to 22 per cent from 30 per cent; and for new manufacturing firms, incorporated after October 1, 2019, to 15 per cent from 25 per cent.
This move has indeed helped propel corporate tax collections and led to positive impact on growth of economy. In fact, a big ask from industry for the upcoming Budget is that Sitharaman should keep the corporate tax rate unchanged.
OECD report
Interestingly, findings of an OECD study released few days back highlighted stabilisation in statutory corporate tax rates worldwide.
The 2024 edition of OECD Corporate Tax statistics ( provides new data on more than 160 countries) showed that the average corporate income tax rates have remained steady at 21.1 per cent over the past three years. This follows a two-decade period that saw average statutory CIT rates decline from 28 per cent in 2000 to 21.1 per cent in 2021.
Anticipation of the new Global Minimum Tax agreed by more than 140 members of the Inclusive Framework on Base Erosion and Profit Shifting (BEPS) may have contributed to the recent stabilisation, according to the OECD report.
More than 35 jurisdictions are currently implementing or plan to implement, the 15 percent minimum corporate effective tax rate with effect from 2024, reducing competitive pressures on CIT rates.
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STT SIZZLES
Call this equity bull market effect. The Centre’s Securities Transaction Tax (STT) — primarily a tax imposed on all stock market equity trades — grew whopping 128.33 per cent in current fiscal upto July 11 at ₹ 16,634 crore. This is more than double the STT collection level of ₹ 7,285 crore in April-July 11 last year.
Currently, the STT rate for selling options is 0.017 per cent, while for futures, it is 0.01 per cent.
Capital market honchos had, in their recent pre-Budget meeting with Sitharaman, urged the Centre to hike STT on high-frequency traders so as to reduce speculation via F&O trades.