Gross Tax Collections

The country’s gross tax receipts surged to a record high of Rs 27.1 lakh crore for 2021-22. It is expected that the trend of recovery in the economy and tax revenues of the Government will continue to grow.

Details –

• This growth was due to robust revenues from income, corporate taxes, customs and GST on the back of a strong economic recovery and rising compliance.
• This revenue growth has also been propelled by rapid economic recovery after successive waves of Covid.
• Against the Union Budget estimates of Rs 22.2 lakh crore, the revenue receipts according to the pre-actual figures totalled Rs 27.1 lakh crore. This is about Rs 5 lakh crore above the Budget estimate.
• This shows a growth of 34% over last year’s revenue collection of Rs 20.3 lakh crore. This growth was led by 49% surge in direct taxes and supported by 20% growth in indirect taxes.

Reasons for high tax collections –

• 2021-22 marks the highest tax-GDP ratio of 11.7%, with direct tax-to-GDP ratio at 6.1% and indirect taxto-GDP ratio at 5.6%.
• Tax buoyancy – The tax buoyancy is at a very healthy figure of 1.9, with 2.8 for direct taxes and 1.1 for indirect taxes. Tax buoyancy is a measure of growth in tax revenues as compared to GDP growth.
• Corporate Tax – The gross corporate taxes during 2021-22 was ₹8.6 lakh crore against ₹6.5 lakh crore last year. This shows that the new simplified tax regime with low rates and no exemptions has lived upto its promise.
• Growth in GST – On the indirect taxes, GST has seen an exemplary growth during 2021-22 despite two waves of COVID-19 pandemic. CGST revenues increased from ₹4.6 lakh crore last year to ₹5.9 lakh crore in 2021-22.
• Customs Duty – During 2021-22, Customs duty has witnessed a growth rate of 48%. During last two years, Government has undertaken comprehensive review and rationalisation of the Customs tariff structure. It has rationalised various exemptions and simplified the tariff structure.
• Better compliance and use of technology – A lot of technology is being used where GST figures are now being matched with income tax figures and compliances are being ensured. All this has resulted in better compliance and better revenues, both in direct and indirect taxes.