New Delhi

More Trouble for Economy as Direct Tax Collection Enters Negative Zone

Author : Odisha Today Bureau | Posted on: 2020-01-22

The bad run for the Indian economy continues with the latest victim being the government’s direct tax kitty, where collections have now entered the negative zone for the very 1st time. According to government sources, direct tax collection in the current fiscal up to January 15 has fallen by 6.1% compared with the corresponding period of previous year. While the development would test the government’s ability to manage its finances and contain the deficit, it has the potential to virtually seal the fate of any big tax cut announcement in the coming Budget.


As per sources, direct tax collections stood at Rs 7.26 lakh crore in the April-January 15 period of FY20 as compared to Rs 7.73 lakh crore in the same period of the previous year. It is after a long gap that the tax collection is actually lower than the numbers given in the previous year. Already the development has rung the alarm bells that current economic crisis may be deep-seated and take much longer time to recover from.


Moreover, Revenue Department officials have attributed the shortfall to a combination of the government’s decision to cut corporate tax rates in September, the overall economic slowdown and the reshuffle in the department following the implementation of the faceless tax assessment plan that has been carried out without preparation.


Additionally, Finance Minister Nirmala Sitharaman had brought down effective tax rate on corporates from 35 to 25% while announcing a new 22% corporate tax rate for companies willing to forgo all exemptions and an even lower 15% rate for new manufacturing units. While corporate tax still commands a lion’s share in overall direct tax kitty of the government, it has been badly hurt in the third quarter of FY20 with collections remaining slow even in the month of January.


Sources said that between April and January 15 this year, corporate tax stood at Rs 3.87 lakh crore while collections under personal income tax head stood at Rs 3.29 lakh crore. The total collections from securities transaction tax (STT) stood at Rs 9,030 crore while another Rs 887 crore has come by way of equalization levy.


The slowdown in collection has presented a pan-India picture with all major revenue collection centres such as Mumbai, Delhi, Bengaluru, Chennai, Pune, Hyderabad and Kolkata witnessing a fall. As against the target of Rs 13.5 lakh crore in direct taxes during FY20, the government could mop up only Rs 6 lakh crore or less than 50% till about mid-November.


Rating agency ICRA has estimated that the government’s gross tax revenue may fall short by Rs 3-3.5 lakh crore in FY20. This would have serious impact on the country’s fiscal deficit that is budgeted at 3.3% of the GDP this year. Already, the government is finalizing a plan to shift its financial consolidation goal post by 2 years, meaning the target to reach 3% deficit would now be targeted for 2022-23 instead of 2020-21. The GDP growth has already slowed down to 6-year low level of 4.5% in July-September quarter of FY20.

Leave A Comment

Odisha Today Talks to Sri Nishikanta Mohapatra, Convenor, AA...
Destruction by Cyclone "Fani"--Utkal University, O...
Odisha Today Talks to Sri Nishikanta Mohapatra, Convenor, AA...
Destruction by Cyclone "Fani"--Utkal University, O...
Odisha Today Talks to Sri Nishikanta Mohapatra, Convenor, AA...

International News

You May Also Like

News Poll

Is the corporate tax cut declared by FM Sitharaman sufficient to ward off the present slowdown in the economy?

A) Fully sufficient
B) Not helpful
C) Somewhat helpful
D) Cannot say

News Updates

Finance Minister Nirmala Sitharaman Apprises G-20
Karnataka Minister Wants New Law to Shoot ‘Anti-
No NRC in Bihar, Reiterates CM Nitish Kumar
Deputy CM Manish Sisodia Given Clean Chit for ‘M
‘America Loves, Respects India’: Trump Said in
Big Archaeological Discovery Near Varanasi: Benara
Malaysian Prime Minister Mahathir Mohamad Submits
Prez Trump, Melania Spin Charkha at Sabarmati Ashr
Accept CAA as We Don’t Have Parliamentary Majori
Dreaded Underworld Don Ravi Pujari Arrested in S.A
Kashmir Schools to Reopen Today After 7 Months
‘Tired’ Taliban Want Peace Deal with US: Prez
‘Judiciary to Play Key Role in Coming Days’
‘Namaste Trump’: US President to Arrive in Ind
‘India Needs Pro-Business, Not Pro-Crony Policie
Makers of ‘Haathi Mere Saathi’ Dropped New pos
Rs 50,850 Cr Disbursed to Farmers Under PM-KISAN S
Cong Leader Shatrughan Sinha Draws Flak from BJP A
Renowned Sand Artist Sudarsan Pattnaik Welcome US
Indian Railways Installs ‘Squat Machine’ at An

Bhubaneswar (Ekamra) Assembly Constituency BJP Candidate Bab...
Bhubaneswar (Ekamra) Assembly Constituency BJP Candidate Bab...