Advance tax collections in the third quarter of the fiscal year almost doubled from the year-earlier period, underscoring hopes of a sustained economic recovery amid the threat from the Omicron Covid-19 variant.
The advance tax mopup in the December quarter was ₹94,107 crore, up 90% from ₹49,536 crore in the same period last year, according to people with knowledge of the preliminary data. Corporate advance tax accounted for ₹54,445 crore, up 75% from ₹31,107 crore. Personal income tax rose 115% to ₹39,662 crore.
“The said amount is expected to increase further as information is awaited from banks,” a government source told ET. Cumulative advance tax collections in the April-December period of the fiscal year stood at ₹3.45 lakh crore on December 16, up 65.5% from ₹2.08 lakh crore in the year earlier. Corporation tax accounted for ₹2.50 lakh crore, up 55% from ₹1.60 lakh crore. Personal income tax rose 98% to ₹97,719 crore from ₹47,865 crore.
“Some of the marquee companies either skipped the payout or paid relatively less in the first two quarters,” said a government official.
Gross Collections 50% Higher
“However, the third quarter has so far been good for most sectors barring a few like automobiles due to the chip shortage, so collections have further improved,” the official said.
Personal income tax collections have been showing an uptick since the beginning of the fiscal, the person said.
This is mainly due to a rise in the income of mid-level to senior management executives in certain sectors such as information technology and pharmaceuticals. Also, promoters of unicorns and other startups have done well during the year, he said.
Advance tax is paid as and when money is earned in four installments rather than at the end of the fiscal year. It is considered an indicator of economic sentiment. The first installment, or 15% of advance tax, is to be paid by June 15, the second by September 15 (30%), the third by December 15 (30%), and the rest by March 15.
Direct tax collection net of refunds grew 67.2% up to December 16 to ₹8.29 lakh crore from ₹4.95 lakh crore in the same period last year. Total refunds issued however fell 7.5% to ₹1.35 lakh crore from ₹1.46 lakh crore a year ago.
Gross collections at ₹9.64 lakh crore were 50% higher than last year. In FY21, gross collections during the period amounted to ₹6.41 lakh crore. The target for the current fiscal year is ₹11.08 lakh crore.
The Central Board of Direct Taxes (CBDT) on Thursday said that nearly 35.9 million income-tax returns have been filed on the new e-filing portal. The number of ITRs filed per day has crossed 600,000 and is increasing as the extended due date of December 31 approaches, it said.
Direct taxes may exceed budgetary estimates for the fiscal as companies have so far been cautious about expectations over Covid concerns. That may change with rising vaccination coverage and a muted Omicron impact.
Experts expect that the budgeted tax collection target, both direct and indirect, of ₹22.2 lakh crore for the current fiscal year will be surpassed.
“With the net direct tax collection till December-mid closing in over ₹8 lakh crore and average monthly goods and services taxes (GST) mopup likely to be around ₹1.15 lakh crore, the government kitty is likely to surpass budget estimates this financial year,” an economist said.
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