19.8% Growth - Strong Q3 Advance Tax Collections, Analysts Say Numbers Reflect Buoyant Economy

The advance tax collections of the Centre for the third quarter (April-December) of FY24 have increased by 19.8% from the previous year, reaching ₹6.24 lakh crore, according to news reports. The data includes payments made until 11:30 pm on December 15, which was the final day for the third quarter's advance tax payment.

A senior official told Economic Times that the final figures might increase on Monday once additional data from the banks is received. The ultimate collection data will be unveiled next week.

The aforementioned official stated that out of the total amount, ₹4.81 lakh crore was attributable to corporate tax, whereas personal income tax made a contribution of ₹1.42 lakh crore.

Responding to the news analysts say that the significant increase in advance tax collections indicates the continuation of economic growth momentum in the initial phase of this quarter.

Analysts anticipate that the direct tax collections will exceed the budget estimates.

The Reserve Bank of India (RBI) increased its Gross Domestic Product (GDP) prediction for the fiscal year 2024 to 7% last week, up from the previously estimated 6.5%. This adjustment was made following an unexpected economic expansion of 7.6% in the quarter ending September.

Analysts also say that the strong progress in tax collections signifies solid corporate earnings. The tax collections, which have exceeded budget expectations, will provide the government with the flexibility needed to achieve its fiscal deficit goal for FY24, set at 5.9% of GDP.