Direct tax collection on track to exceed budget target, says CBDT chairman

Central Board of Direct Taxes (CBDT) chairman Nitin Gupta, during a recent address, expressed his strong confidence that the current fiscal's direct tax collection will exceed the budget estimate of Rs.18.23 trillion. Online gaming companies have contributed Rs.600 crore under the recently implemented TDS deduction rule for winnings over Rs.100, starting April 1, 2023. Additionally, crypto assets have contributed Rs.105 crore through the new 30 percent TDS regime introduced in FY23.

The government remains optimistic about surpassing the direct tax collection target. Although there has been a slowdown in corporate tax collection growth, Nitin Gupta attributed the moderation in corporate tax collection growth to the concessional corporate tax regime introduced in FY20, stating that it will continue to grow at a "moderate" pace.

Direct tax collection in India is on track to exceed the full-year target, with net collection registering a 21.8% increase to Rs.9.57 trillion as of October 9. This comes after the government issued refunds totaling Rs.1.5 trillion during the same period.

Corporate tax collection in India has been moderate in recent years, despite a reduction in corporate tax rates from 30% to 22%, or 15% for new manufacturing companies. This is because approximately 60% of corporate profits shifted to the new concessional regime last year.

Introduced in FY20, companies can choose to pay income tax at a rate of 22 percent, provided that they will not avail of any exemptions or incentives. Personal income tax collections in India have grown at a much faster pace than corporate tax collections so far this fiscal year. While gross corporate tax receipts have grown by 7.3%, personal income tax collections have risen by 29.5%, excluding securities transaction tax (STT) receipts.

Nitin Gupta also stated that the steady growth in tax receipts this fiscal year is attributed to various factors, including the use of efficient technology and the sharing of taxpayer transaction information in annual information statements. These factors have helped the growth and the addition of new tax filers, with approximately 5.3 million new taxpayers filing returns by July.

Direct tax collection has reached 52.50% of the total budget estimates for the year, which are 9.75% higher than the previous fiscal year's collection of Rs.16.61 trillion.

Gupta also highlighted the department's efforts to resolve around 140,000 entries through a new demand management facilitation system launched last year. He also mentioned that around 3.5 million refund cases are currently pending due to discrepancies and bank account validation issues.

Out of 72.7 million ITRs filed, 71.5 million were verified by taxpayers, and the department processed 68 million ITRs. A remarkable 93.5 percent of duly verified ITRs have been processed thus far for the assessment year 2023–24.

The CBDT chairman also mentioned that the department has collected an additional Rs.1,300 crore in taxes after taxpayers filed 1.68 million updated returns during the current financial year.

Around 60–70% of individual taxpayers are expected to shift to the new tax regime, which was introduced in the last budget to simplify tax calculations by eliminating various deductions and claims and offering a flat and lower tax rate.