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The trend of increase in income tax collection is expected to continue in the coming months on increased compliance, higher corporate profitability and increased trade in festive season, experts said.
The gross direct tax collection grew 30 per cent to ₹8.36 lakh crore in the April to mid-September period of the current fiscal on increased corporate tax and personal income tax (PIT) mop up due to increased economic activity.
Deloitte India Partner Rohinton Sidhwa said, "The increase in compliance also stems from influencing behaviour like the sharing of details of income generating activity that taxpayers are being shown on the e-filing portal.
"It's expected that the trend will continue for now. While corporate tax returns are still to be filed for the last fiscal, advance tax collections show strong trends indicative of earnings," he said.
EY India Tax & Regulatory Services Partner Sudhir Kapadia said India Inc saw a robust increase in profitable growth, aided by an increase in consumer prices due to higher inflation.
Robust increase in PIT shows that the earnings of individuals have been on the rise, as also those of proprietary and partnership businesses.
"The overall growth in India's economy along with the increasing digitisation of tax administration has ensured that an increasingly greater share of the economy is coming under the tax net," Kapadia pointed out.
The ₹8.36 lakh crore direct tax collection for the April 1- September 17 period includes corporate tax of ₹4.36 lakh crore and PIT of ₹3.98 lakh crore.
Spurt in collections
Experts said increased demand from consumers has also manifested itself in higher GST mop up, with over ₹ 1.40 lakh crore being the 'new normal' for collections every month.
AMRG & Associates Senior Partner Rajat Mohan said the introduction of crypto tax has aided in increasing the number of taxpayers and broadening the tax base, leading to a spurt in tax collections.
"TDS/TCS implementation on purchase of goods, rendering of business perquisites, technology-based transaction monitoring vide Annual Information Statement (AIS), interlinking of GST with Income Tax data have contributed to real-time capturing of high-value data points for plugging the tax leakage," Mohan added.
Nangia Andersen LLP Tax Leader Aravind Srivatsan said while the large listed companies in FMCG and IT space benefited from the pandemic, pent up demand has also helped boost corporate profits and underlying tax collections.
With more companies availing the standard tax rate of 25 per cent, there has also been a healthy increase in corporate tax collections.
"One expects this trend to continue as more startups (with unicorn status) achieve profitability, and reap benefits of targeted government intervention schemes such as PLI Schemes, the coming period would aid manufacturing companies which would benefit from softening of commodity prices/freight expenses," Srivatsan added.
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