FY20 gross direct tax collection down nearly 5% at 12.33 lakh crore
Business & Economy

FY20 gross direct tax collection down nearly 5% at 12.33 lakh crore

IANS

New Delhi, June 7, 2020

The actual gross direct tax collection during the financial 2019-20 declined by 4.92 per cent to 12.33 lakh crore, the Finance Ministry said in a statement.

The gross direct tax collection stood at Rs 12,33,720 crore for last fiscal, compared to Rs 12,97,674 crore collected in FY 2018-19.

The gross collections would have stood at Rs 14.01 lakh crore in 2019-20, if revenue foregone in corporate tax and personal income tax was taken into account.

The Finance Ministry said that the "fall in the collection of direct taxes is on expected lines and is temporary in nature due to the historic tax reforms undertaken and much higher refunds issued during the FY 2019-20".

"This fact becomes more apparent if we compare the gross collection (which removes anomalies created by the variation in the amount of refunds given in a year) after taking into account the revenue foregone estimated for the bold tax reforms undertaken, which have a direct impact on the direct taxes collection for FY 2019-20," it said.

The ministry also said that in FY 2019-20, the amount of total refunds given was Rs 1.84 lakh crore as compared to Rs 1.61 lakh crore in FY 2018-19 which is a 14 per cent increase year-on-year.

As per the government, steps such as corporate tax rate cuts for all existing domestic companies, incentives for new manufacturing domestic firms, reduction in MAT rate and IT exemption for individuals earning income up to Rs 5 lakh caused a revenue impact of Rs 1.45 lakh crore for corporate tax and a Rs 23,200 crore hit in the personal income tax collection.

Regarding the slow pace of investments despite the tax reforms, the Finance Ministry statement said that the assertion that investment have not been picking up is "not correct and is without appreciation of the reality of the business world".

The setting up of new manufacturing facilities requires various preliminary steps like acquisition of land, construction of factory sheds, setting up of offices and other infrastructure among others and these activities cannot be completed in just a few months, and manufacturing plants cannot start operations immediately after announcement of reforms, said the ministry.

"The tax reforms were announced in September 2019 and the results are expected to be visible in the next few months and in years to come. The outbreak of Covid-19 may further delay this process but the growth in production due to these tax reforms is bound to happen and cannot be stopped," it said.

The Finance Ministry added that the government is committed to provide a hassle-free direct tax environment with moderate tax rates and ease of compliance to the taxpayers and also to stimulate the growth by reforming the direct taxes system.

It also outlined some of the recent steps taken in this direction including reforms in personal income tax, abolition of dividend distribution tax (DDT) and schemes to resolve tax disputes, among others.

IANS

NetIndian
www.netindian.in