Context: 

India’s Net Direct Tax Collection rises 20.25% YOY to Rs.15.60 lakh crore, reaches over 80% of FY24 Target.

Key Data On Direct Tax Collection: By Finance Ministry

• Overall Growth & Performance: 

  • Gross collections amount to Rs. 18.38 lakh crore, showing year-on-year growth of 17.30%. 
  • Net collections at Rs. 15.60 lakh crore, up 20.25% year-on-year. Represents 80.23% of revised target for FY 2023-24. 

• By Tax Type: 

  • Corporate Income Tax (CIT):
    • Gross growth rate is 9.16% year-on-year. Net growth rate is 13.57% year-on-year. Personal Income Tax (PIT): 
    • Gross collections up 25.67% (PIT only) / 25.93% (including STT) year-on-year. 
    • Net collections up 26.91% (PIT only) / 27.17% (including STT) year-on-year. 
• Refunds: Rs. 2.77 lakh crore issued in refunds between April 1st, 2023 and February 10th, 2024.

Government Initiatives to Improve Direct Taxes:

• Reduction in tax rates: 

  • Corporate Tax Rates were Reduced : from 30% to 25.17% (including surcharge and cess) for existing domestic companies.

• Promotion of Technology in Tax Department: 

  • Faceless E-assessment Scheme (2019) & Faceless Appeals(2020):  It removes direct interaction between taxpayers and assessing officers/ appellate authorities fostering transparency and reducing bias. 
  • Document Identification Number (DIN): (2019), a unique DIN is assigned to every communication related to tax matters, facilitating easy tracking and verification

• Reducing litigation by providing tax certainty: 

• • Advance Pricing Agreements (APAs): It allows taxpayers and tax authorities to pre-agree on how to price international transactions, minimizing future disputes and fostering certainty.
    •  FY 2022 saw a record 95 APAs signed, highlighting the program’s success in reducing litigation
  • Vivad se Vishwas Act, 2020: This initiative provides a window for settling pending direct tax disputes, offering reduced penalties and fees for timely resolution. 
    • By offering a streamlined process and reducing litigation costs, the Act promotes certainty and encourages dispute resolution.

Overall, the direct tax collection figures indicate robust growth revenue, with both Corporate & personal income tax contributing a steady increase. The Steady growth in tax collections reflects positively on the fiscal health of the country during the current fiscal year.

News Source: The Hindu