India's Tax Collections Set To Surpass Budget Estimates By "Considerable Margin" In FY24: Report

India's total tax receipts in FY2023-24 could exceed the budget estimate by a “considerable margin” as the current momentum in direct tax, and Goods and Services Tax (GST) is likely to sustain in the coming months, Business Standard reported citing government sources.

These projections are based on a preliminary assessment as part of the government’s pre-Budget exercise.

A more accurate forecast will emerge with the data on advance tax payments due in December's third quarter and GST collections from April to December.

Amid ongoing pre-Budget sessions at North Block, policymakers are in the process of evaluating tax revenue estimates for the next fiscal year, 2024-25.

In terms of GST, authorities are anticipating a 13-14 per cent increase in year-on-year collections, with expectations that the monthly average could reach Rs 1.7-1.8 trillion in the fiscal year 2024-25, Business Standard reported citing sources.

The GST collection reached Rs 1.72 trillion in October, the highest monthly collection after April's Rs 1.87 trillion, setting this financial year's monthly average at around Rs 1.6 trillion to Rs 1.65 trillion.

This is on account of several policy measures and action plans that the revenue department has readied and initiated in the past few months. These would fully reflect in the next financial year,” a source was quoted as saying in the Business Standard report.

Considering both direct and indirect taxes, the gross tax collection is projected to increase by 10.45 per cent to Rs 33.61 trillion in 2023-24.

The government anticipates a 10.5 per cent rise in corporate and personal income tax revenues, aiming for Rs 18.23 trillion this fiscal year, while GST revenues are expected to see a 12 per cent growth to Rs 9.56 trillion.

For direct taxes, there is an expectation of a 10.1 per cent year-on-year increase in gross collections and an 11.1 per cent rise in net collections for 2023-24.

Corporate and personal income tax revenues are projected to grow by 11.7 per cent and 11.4 per cent, respectively.

An official source familiar with the assessment was quoted in the Business Standard report as saying that tax buoyancy is expected to remain above 1, outpacing economic growth, due to the formalisation of the economy, data integration, and enhanced compliance.

"However, tax projection is being decided after taking multiple factors into account,” the source added.

Following modest growth in the early months of this fiscal year, September 2023 saw a 27 per cent year-on-year increase in corporate tax collections, bolstered by substantial advance tax payments that nearly reached 49 per cent of the year's Budget Estimate.

Meanwhile, personal income tax collections are approaching the Budget Estimate. To date, direct tax collections have reached 53 per cent of the full-year estimate for 2023-24.

However, excise duty remains a bit of a concern if the present trend continues, according to the sources.

While it's premature to make definitive judgments, reaching the excise revenue estimate may pose a challenge. Since the implementation of GST, excise duty is primarily imposed on petroleum and tobacco products.

Conversely, meeting the Customs revenue target for the fiscal year is expected to be more straightforward.

On the other hand, achieving the Customs target for the financial year should not be too difficult.