Dipping Tax Collections: A Fiscal Challenge

Net direct tax collection experienced a 3.95% drop, amounting to Rs 6.64 lakh crore this fiscal year, primarily due to an increase in refunds, as per government data disclosed on Tuesday.

The Central Board of Direct Taxes (CBDT) revealed that refunds surged by 10% to Rs 1.35 lakh crore from April 1 to August 11. Corporate tax collection saw a slight increase of 3% to Rs 2.29 lakh crore, while the non-corporate tax collection, covering individuals and certain groups, fell by 7.45% to Rs 4.12 lakh crore.

Analysts attribute the decline to high refunds and extended filing deadlines. Price Waterhouse's Hitesh Sawhney and ICRA's Aditi Nayar indicated that while achieving the government's fiscal targets appears challenging, an improvement in collection rates is anticipated as the fiscal year progresses.

(With inputs from agencies.)