October 18, 2024
Personal income tax collections surged by 25.4% in FY24, surpassing corporation tax collections for the second consecutive year
Maharashtra contributed over INR 7.61 trillion, representing 40.4% of state-level direct tax revenue during the year
The cost of tax collection dropped to 0.44%, reflecting improved efficiency in tax administration
Income tax return filings increased by 10.7%, reaching 86.1 million in FY24, with individual filings rising by 9.6% to 76.4 million
India’s direct tax collections as a share of gross domestic product (GDP) reached a 24-year high of 6.64% in the 2023-24 financial year (FY24), according to data released by the Central Board of Direct Taxes (CBDT). The surge in collections, which grew by 17.82%, far outpaced the country’s nominal GDP growth of 8.42% during the same period. This marked an improvement in tax buoyancy to 2.12, compared to 1.18 in the previous year.
Direct taxes amounted to INR 19.6 trillion in FY24, a significant figure marking the final year of Prime Minister Narendra Modi’s second term. Gross direct tax collections, excluding refunds, stood at INR 23.4 trillion. These collections contributed 56.72% to the overall tax revenue, the highest in 14 years, up from 54.63% in FY23. Notably, this contribution was much lower at 36.31% in FY01, highlighting the growing share of direct taxes in India’s fiscal landscape.
Corporation tax collections were reported at INR 9.11 trillion, increasing by 10.3%, while personal income tax collections saw a remarkable rise of 25.4%, reaching INR 10.45 trillion. This marks the second consecutive year in which personal income tax collections have outpaced those from corporation tax, signalling a broader base of individual taxpayers contributing to government revenues.
The administrative efficiency of tax collection has improved significantly, with the cost of collecting direct taxes declining to 0.44%, the lowest since FY01. This is seen as a reflection of advancements in the tax machinery.
Maharashtra continued to lead in tax contributions, generating INR 7.61 trillion, which accounted for 40.4% of the total direct tax revenue from states in FY24. When the Union Territories are included, Maharashtra contributed 38.9% of overall receipts.
Taxpayer participation has also increased, with 86.1 million income tax returns (ITRs), including revised filings, being submitted during FY24, an increase of 10.7% from the previous year’s 77.8 million. Individual ITR filings rose by 11%, reaching 81.3 million. The overall number of ITR filers increased by 9.3% to 80.9 million, while individual filers grew by 9.6% to 76.4 million, reflecting growing tax compliance in the country.
Source: Business Standard