The Gross Direct Tax collections have risen by 17.95% to INR 11.09 lakh crores during this fiscal year so far.
Key Highlights
- The provisional data released by the CBDT reveals that the Gross Direct Tax Collections increased by 17.95 percent over the previous corresponding period.
- Within the Direct Taxes collected, the Personal Income Tax (PIT) grew by 29.53 percent.
- The use of technology has helped the department detect tax evasion.
India is infamous for a shadow economy, with several individuals and businesses out of the tax net, yet, the Direct Tax Collections have been rising lately.
A press release by the Central Board of Direct Taxes (CBDT) reveals that the Gross Direct Tax Collections have risen by 17.95% from April 1 to October 9 during the FY 2023-24, while the Net Direct Tax collections have risen by 21.82 per cent as compared to the corresponding period of the previous Fiscal year.
Speaking on the same to reporters, Shri Nitin Gupta, the Chairman of the CBDT has put forth various reasons explaining the growth in Direct Tax collections, which constitutes Income Tax, Corporate Tax, Securities Transaction Tax, inter alia.
New Taxpayers
There has been a rise in new taxpayers that filed their Income Tax Returns. The data provided by the CBDT earlier this year puts the number of new taxpayers that filed their Income Tax returns for AY 2023-24 at 53 lakhs.
This gets reflected in the growth of Personal Income Tax (PIT) by 29.53 per cent in the provisional data released.
To further make it easier for taxpayers to file their Income Tax returns, the CBDT in August had launched a revamped portal with the functionalities of better access to rules, comparison of different acts and sections, easier navigation, tips, etc.
Use of Technology
The use of technology to detect tax evasions and a smoother e-filing process has increased compliance.
Apart from that, several other technological developments including an online management system, e-tracking of refunds, have helped the tax department in various aspects.
Talking to The Indian Express, the CBDT Chairman revealed that the department is availing the services of a specialised call centre to reach out to taxpayers for disputes in refunds, some of which had arisen due to a shift from paper registers to computers.
Does an increase in Direct Tax Collections indicate Formalisation?
The task of measuring the size of the informal economy of India is laden with hindrances. The scarcity of data, combined with the irregular release of official data poses several challenges to check whether the informal economy of India is shrinking or not.
The latest Periodic Labour Force Survey (PLFS) puts the percentage of the workforce engaged in the informal sector at 74.3 percent, an increase from the 71.8 per cent recorded in 2021-22.
This reflects that the Indian economy still has a dominant informal economy which must be addressed through policy interventions, providing the resources and conducive factors for formalisation.
To widen the tax net, the CBDT has taken several measures to simplify the process of filing Income Tax Returns, including the introduction of a new tax structure and a rebate upto INR 7 lakhs under the new tax regime.
Along with that, the government had earlier launched the MSME Formalisation Project to bring informal/unorganised MSME enterprises within the ambit of the formal economy, and under the corporate tax net.
Speaking to the Indian Express, the CBDT Chairman said that he is hopeful that around 60-70 percent of individual taxpayers will shift to the new tax regime. He further revealed that corporates have already shifted around 60% of their profits to the new tax regime.
