Indirect tax collections grow 14% YoY, direct taxes 30% in FY23

India’s Indirect tax collections grew by 14% year-on-year (YoY) in the April-August quarter of FY23, over the required rate of 3.5% to achieve the full-year target, according to media reports. High GST collections mostly aided the robust increase. 

According to the reports, the increase in indirect tax collections is expected to surpass the FY23 target of INR 13.38 trillion by a huge margin. This will allow the 

government to look for additional sources of revenue to keep the budget deficit within the target of 6.4% of its Gross Domestic Product (GDP). 

Experts said that even though excise duty receipts were affected by duty cuts in May FY23, Central Goods & Service Tax (CGST) has grown at 35%. 

Despite an excise cut in petrol and diesel in November 2021 collections for indirect tax grew by 20% YoY to INR 12.93 trillion in FY22, contributed by tax buoyancy. 

Direct tax collections, on the other hand, increased by 30% YoY till September 8 in FY23 due to a rise in refunds by 65% in the June quarter. They’re expected to surpass the FY23 budget target of 14.2 trillion by a large amount. Due to higher compliance and a favourable base effect, both personal income tax (PIT) and corporate income tax (CIT) have performed well.

The reports further added that India’s advance direct tax collections increased by about 22% YoY to INR 1.81 trillion in the second quarter of FY23. These collections from Limited Liability Partnerships (LLPs), and individuals in the June quarter grew by 33% YoY at INR 1.01 trillion. 

Gross direct tax collections (before refunds), up to September 8 FY23, rose by 35.5% YoY to INR 6.48 trillion.

Source: Financial Express (1)(2)