With all big tax heads yielding revenues drastically larger than the respective revised estimates (REs) shown in the Budget, the Centre has appropriated an added Rs 78,000 crore as net (post-devolution) tax income in FY21. This implies if other inflows and outflows stick to Budgeted numbers, the fiscal deficit for the year could be 46 basis points decrease than budgeted 9.5% of the nominal gross domestic solution (GDP), if one goes by the second advance estimate of national revenue.
According to two statements issued by the finance ministry this month, gross tax receipts (GTRs) – net of refunds but just before transfers to the states – in the final economic year had been up Rs 1.22 lakh crore or 6.4% more than the RE at Rs 20.16 lakh crore. In FY20, GTR saw a uncommon decline – the collections in the year had been Rs 20.04 lakh crore compared with Rs 20.76 lakh crore in FY19.
FE has estimated net receipts (post-devolution) in FY21 at Rs 14.2 lakh crore, up 5.8% more than RE and 4.8% larger than such receipts in FY20.
The year-on-year development in tax collections in FY21 is a outstanding feat provided the rarity of an financial contraction in the year (nominal GDP is observed to have shrunk 3.8% in the year).
Of course, a significant portion of the development in tax income is attributable to the steep hike in assorted taxes (excise/cess) on petrol and diesel, but enhanced buoyancy is visible across other taxes like GST, Customs and individual revenue tax. Excise income in FY21 was up a steep Rs 1.23 lakh crore more than the Budget Estimate and practically Rs 30,000 more than RE. Even corporate tax income exceeded the RE level by Rs 11,000 crore.
According to a finance ministry statement on Tuesday, “The provisional figures for indirect tax collections for the Financial Year 2020-21 show that (post-refunds, pre-devolution) revenue collections are at Rs 10.71 lakh crore compared to Rs 9.54 lakh crore for the financial year 2019-20, thereby registering a growth of 12.3%”.
The indirect tax (pre-devolution) break-up is as follows: Customs collections stood at Rs 1.32 lakh crore in FY21 compared to Rs 1.09 lakh crore in the course of the prior economic year, a development of about 21%. Central Excise stood at Rs 3.91 lakh crore in FY21 compared to Rs 2.45 lakh crore in the prior year, up a strong 59%. GST collections (CGST+IGST+compensation cess) in the course of 2020-21 had been Rs 5.48 lakh crore, up 6% more than RE but 8% decrease than the collections in FY20.
“The GST collections were severely affected in the first half of the financial year on account of Covid. However, in the second half, the GST collections registered a good growth and collections exceeded Rs 1 lakh crore in each of the last six months. March saw an all-time high of GST collection at Rs 1.24 lakh crore… Several measures taken by the central government helped in improving compliance in GST,” the ministry added.
The Centre collected Rs 9.45 lakh crore as direct taxes (post-refund, pre-devolution) in 2020-21, up Rs 40,000 crore or 4.4% from the RE. Had the government not been liberal with refunds – up Rs 78,000 crore or 42% on year at Rs 2.61 lakh crore – the collections would have been even larger.