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Direct Tax share in economy at decade low
April, 29th 2016

Corporate tax collections have risen nearly 12-fold in last 15 years and personal income tax 9 fold but share of direct taxes in the economy has fallen to almost a decade low of 5.47 per cent, according to direct tax data published by the government today.

There was not much differential between corporate tax collections and personal income tax collections in 2000-01. While corporate tax collections that year stood at Rs 35,696 crore, personal income tax collections were Rs 31,764 crore.

In 15 years, corporate tax collections have risen 12-fold to Rs 4,54,419 crore in 2015-16 and is more than 58 per cent higher than Rs 2,86,801 crore income tax collections.

After including other direct taxes, total direct tax collections were Rs 68,305 crore in 2000-01 which have risen to Rs 7,42,295 crore in 2015-16.

Prime Minister Narendra Modi took to the twitter to say it was a "landmark" decision to publish income tax data. "It is a big step towards transparency & informed policy making."

"Am sure this data will be used by researchers and analysts and lead to enhanced insights for policy making on taxation," he said.

The data showed 2.9 crore Indians filed income tax returns and the largest group of tax payers earned an average of Rs 6,94,000 while just six people declared an average income of Rs 68.72 crore in 2012-13 as per the latest data.

Share of direct taxes to GDP touched a peak of 6.3 per cent in 2007-08 and has since declined to 5.47 per cent in 2015-16. It was 3.25 per cent in 2000-01.

Maharashtra contributes the biggest share of direct taxes at Rs 2.77 lakh crore in 2014-15 when total collections were Rs 6.96 lakh crore.

Delhi was second biggest contributor at Rs 91,247.90 crore while Karnataka was third at Rs 60,595.22 crore. Modi's home state Gujarat gave Rs 35,912.46 crore of taxes, behind Tamil Nadu's Rs 44,732.62 crore.

State wise data for 2015-16 was not available.

Direct taxes made up for 36.31 per cent of the total taxes in 2000-01. This ratio has risen to 51.05 per cent in 2015-16. The ratio of direct taxes to total taxes in 2015-16 is the lowest in past 9 years with a peak of 60.78 per cent being hit in 2009-10. The ratio was 52.97 per cent in 2007-08 and over 56 per cent in 2013-14 and 2014-15.

Indirect tax collections have risen from Rs 1.2 lakh crore in 2000-01 to Rs 7.12 lakh crore in 2015-16. Total tax collection in 2015-16 was Rs 14.54 lakh crore as against Rs 1.88 lakh crore in 2000-01.

Cost of tax collection has however gone down from 1.36 per cent to 0.62 per cent. In absolute terms the spending on collection of taxes has however risen from Rs 929 crore to Rs 4,593 crore during the period.

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