India's Direct Tax Collections Surge 16.45% to Rs 15.8 Trillion

India's direct tax collections have surged to Rs 15.8 trillion so far in the current fiscal year, reflecting a robust 16.45% increase compared to the previous year, surpassing budget estimates.

The growth is largely driven by a 22% rise in non-corporate tax collections, including taxes from individuals, partnerships, and local authorities, which have reached Rs 7.97 trillion. Corporate tax collections have also seen a positive trend, growing 8.6% to Rs 7.42 trillion, according to data released by the Income Tax Department as of December 17.

Before factoring in refunds, corporate tax collections alone have grown by 17%. The government had initially projected a 13% annual growth in direct tax revenues for the year, and with over a quarter of the fiscal year remaining, collections have already reached 72% of the full-year target of Rs 22 lakh crore.

Tax refunds have also seen a substantial increase, with the government disbursing Rs 1.82 trillion in corporate tax refunds, up 70% from the previous year. In the non-corporate segment, refunds amounted to Rs 1.56 trillion, marking a 20% rise.

The strong performance in tax revenue is attributed to improved tax administration, with technology playing a key role in enhancing compliance. According to Amit Maheshwari, tax partner at consulting firm AKM Global, the use of advanced technologies like AI has boosted tax collection efficiency and helped ensure accurate disclosures of income, particularly foreign assets. The buoyant capital markets have also contributed to higher capital gains taxes, further bolstering the tax revenue.

In addition to these efforts, the Income Tax Department has launched a new campaign to improve tax compliance. It is sending text messages and emails urging taxpayers to correct discrepancies between the income they reported in their returns and the data available to the department. The department is also reaching out to individuals involved in high-value transactions who have yet to file their tax returns. The deadline to submit revised or belated returns for FY24 is December 31.

Meanwhile, collections from securities transaction tax (STT) have risen significantly, reaching Rs 40,114 crore, an 85% increase over the previous year. STT is levied on the sale and purchase of securities, including equities, derivatives, and equity-oriented mutual funds, and varies depending on the type of transaction.

Also Read: Record Increase in Women Income Tax Returns Filers Across India