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What is the article about?
- The status of central government tax collections and its analysis.
Relevance:
- GS3: Indian Economy and issues relating to Mobilization of Resources; Government Budgeting;
- Prelims: trends
Key findings:
- Direct taxes:
- personal income taxes – grown by a robust 32 per cent
- corporate tax collections – grown at a healthy 17 per cent
- Indirect taxes:
- GST collections have also stabilised at a higher level.
Analysis:
- Even as concerns over the country’s medium-term economic outlook are beginning to be voiced, central government tax collections continue to fare better than expected.
- The gross direct tax collections have touched Rs 8.98 lakh crore, up almost 24 per cent over the same period last year. This is almost 53 per cent of the budget estimate for 2022-23.
- This latest data only reaffirms the view that tax collections will exceed budget estimates by a significant margin this year.
- Higher central government tax collections also imply that tax devolution to states will be significantly higher than the budgeted amount of Rs 8.16 lakh crore this year.
Way forward:
- On the expenditure side, capital expenditure has so far grown at a brisk pace, particularly by the ministries of roads and railways.
- However, notwithstanding the healthy growth in tax revenues and collections from other sources, there are concerns that a higher subsidy outgo will pose upside risks to the fiscal deficit target.
- In the budget, the food subsidy had been pegged at Rs 2.06 lakh crore, while the fertiliser subsidy had been budgeted at Rs 1.05 lakh crore.
- This could make it challenging to meet the fiscal deficit target of 6.4 percent of GDP
