5% increase in net direct tax receipts

India’s net direct tax collection for the financial year 2020-21 affected by the epidemic increased by almost 5% year-on-year to ₹ 9.45 lakh crore, higher than the revised estimate of ₹ 9.05 lakh crore presented in the Union Budget and reflecting a gradual economic Recovery in recent months.

Tax experts said that Vivad Se Vishwas scheme to settle the pending tax disputes helped to increase the collection, as well as net corporation tax collection for the year amounting to 7 4.57 lakh crore.

According to provisional figures released on Friday by the Finance Ministry, the revenue income from personal income tax including securities transaction tax was 4.88 lakh crore. Direct tax refunds increased from 42% to ₹ 2.61 lakh crore in FY21 from ₹ 1.83 lakh crore in the previous year.

“Despite the extremely challenging year, the advance tax collection for 2020-21 is ₹ 4.95 lakh crore, representing an increase of about 6.7% over the previous fiscal year,” the ministry said.

Improved direct tax collections, along with the recent upsurge in the flow of indirect taxes including GST, suggest that India’s fiscal position could improve by 9.5% of the projected fiscal deficit in revised estimates, said India’s Chief Economist Devendra Pant ratings and research.

‘Spending is the key’

“The fiscal deficit in 2020-21 may be lower than the revised estimate, provided there is no reduction in the expenditure side. Further, the Central Government has confirmed the cancellation of borrowings of the last scheduled government in the last financial year, ”said Mr. Pant.

“Strong campaign for trust planning from Vividh, use of technology and digitization, and widening of tax base with tax collected at source has contributed to higher tax collection,” said Samir Kanbar, tax partner at EIY India.