Advance tax collection at the end of the third instalment during the current fiscal recorded a muted growth of little over 4 per cent, data by Income Tax Department showed on Friday. Last year, the growth rate was around 21 per cent.
With this trend, there is a possibility that net direct tax collection would be lower than the budget estimates, though government sources remained hopeful about meeting ₹25.20 lakh crore target (including Securities Transaction Tax) with strong final quarter collections.
Data showed that while advance tax by corporate assessees increased by around 8 per cent to over ₹6.07 lakh crore, collection from non-corporate tax (NCT) assessees declined by around 6.5 per cent, reaching over ₹1.81 lakh crore. NCT includes taxes paid by individuals, HUFs, firms, AoPs, BoIs, local authorities and artificial juridical person.
Though the tax department has not given any reason for muted growth in advance tax collection, experts attribute it to tax cut as announced in the Budget, along with GST rate cut which may have impacted corporate profitability.
Overall net direct tax collection (gross minus refund) during April 1 and December 17 reached over ₹17.04 lakh crore which is 8 per cent higher than over ₹15.78 lakh crore collected during the corresponding period of the last fiscal. This is the second successive month when refunds have seen de-growth.
Overall collection up
An tax expert said tax refund issuance has dropped much below last year’s numbers while overall tax collection has grown marginally at 4 per cent. The drop in refunds is being attributed to higher amount of screening of fraudulent refund claims. Holding back of refunds also accelerates litigation that the tax department can ill afford. “Corporate advance tax increase signals good corporate earnings. Non-corporate advance tax collections have, however, declined possibly on the back of rate cuts for individuals given in previous Budget,” he said.
In the Budget Estimate (BE) of Fiscal Year 2025-26, corporation tax is estimated at ₹10.82 lakh crore (indicating a growth of 10.4 per cent over RE 2024- 25). Taxes on income (excluding securities transaction tax) are estimated at ₹13.60 lakh crore in BE 2025-26 (recording a growth of 13.1 per cent over RE 2024-25) with an implied buoyancy of 1.30. The implied buoyancy is lower than the average buoyancy of 1.74 obtained in last five years (ending in FY 2023-24).
Source from: https://www.thehindubusinessline.com/economy/advance-tax-growth-slows-to-43-after-3rd-instalment/article70414796.ece
