The government may miss the revised direct tax collections target of Rs 12 lakh crore for the current financial year ending March by a significant margin on account of a shortfall in income tax collections, a government official said. The Budget revised the target for direct tax collections for 2018-19 to Rs 12 lakh crore from Rs 11.50 lakh crore earlier.
Direct tax collection in April-January has been Rs 7.90 lakh crore, a growth of around 13 per cent, the official said.“We are still below the Rs 8 lakh crore mark, therefore it would have been difficult to meet the initial aim of Rs 11.50 lakh crore. And now with the upward revision, it looks very unlikely that we will meet the revised target,” the official said.
The Interim Budget presented on Friday revised the target for corporate income tax collections for 2018-19 to Rs 6.71 lakh crore from Rs 6.21 lakh crore, but kept the income tax collection target unchanged at Rs 5.29 lakh crore. “We needed a higher target for direct taxes to meet the revised fiscal deficit target of 3.4 per cent. So we added Rs 50,000 crore to corporate tax,” the official said. However, with income tax collections growing way below the Budget estimate, the income tax department is struggling to meet the target.
“The major issue is that our income tax, which was earlier growing at 25-30 per cent, is now showing a growth of only 15-16 per cent. The impact of demonetisation has gone and therefore, the growth in personal income tax has gone down,” the official said. “The Budget has projected a growth target of 26 per cent in income tax, and we are far from that growth rate,” the official said. According to data from Controller General of Accounts, direct tax collections grew 12.3 per cent on year to Rs 7.40 lakh crore in April-December.
A back-of-the-envelope calculation suggests that income tax collections will have to grow 34.1 per cent on year in the last three months of the year to meet the revised Budget estimate for 2018-19. The Central Board of Direct Taxes is now looking at several measures to meet the higher target set for the current financial year, including resolution of tax related litigations and elaborate surveys to shore up revenues.
The government is already staring at massive shortfall of around Rs 1 lakh crore on goods and services tax collections and has maintained that the shortfall will be made up by higher collections in direct taxes. However, with the personal income tax collection growth for the current fiscal far from the estimate, the income tax department could miss the revised Budget aim for 2018-19. Interestingly, in the previous financial year as well the government had revised its Budget target for direct tax collections to Rs 10.05 lakh crore from Rs 9.80 lakh crore, and managed to collect Rs 10.03 lakh crore by the end of the year.