At ₹8.2-lakh crore, advance tax collection shortfall narrows to 5.5%; transactions yet to be fully reconciled
With the provisional data for the fourth advance tax instalment payment indicating a narrowing of the gap between the numbers of the current and the previous fiscal years, the government is hopeful that the final numbers will exceed the revised targets for 2020-21.
According to the provisional data, the net tax collection gap has narrowed to around 5.5 per cent at the end of the fourth instalment from around 13 per cent after the third, in December. As at close of March 15, the total net collection was over ₹8.20-lakh crore against ₹8.67-lakh crore on the corresponding date of 2019-20.
“We are confident that net collection will turn positive as a number of transactions are yet to be settled. We expect advance tax collections to be very good,” a senior Finance Ministry official told BusinessLine.
Four in green zone
According to the official, of the 18 regions, four — Mumbai, Bengaluru, Jaipur and Bhubaneswar — are back in the green zone. The best performance came from the Bengaluru region with the net collection growing over 11 per cent. The Mumbai region, the largest contributor to overall direct tax collection, turned the corner, posting a marginal increase.
As on March 15, the net corporate tax collection was around ₹4-lakh crore, while the income-tax mop-up topped ₹4.02-lakh crore. Equalisation levy fetched over ₹1,700 crore. The official clarified that these figures are not comparable with last fiscal’s as a lot of bank transactions done on March 15 are yet to be reconciled.
The government had lowered the tax revenue estimates for 2020-21 in view of the Covid pandemic. According to Budget Estimate, the gross corporate tax collection was pegged at ₹6.81-lakh crore and this was revised down to ₹4.46-lakh crore. Similarly, for income tax, the BE of ₹6.38-lakh crore was revised to ₹4.59-lakh crore.
The government is hopeful of not just meeting, but exceeding the revised targets.
Gaurav Mehndiratta, Partner with KPMG, said: “We believe that the revised estimated direct tax collection target of ₹9.05 lakh crore should be exceeded. This is considering the past trends, that is, in FY20, an incremental 20.8 per cent was collected between March 16 and end of the FY. This is also backed up by rising economic indicators like positive GDP growth in Q3 FY21 [0.4 per cent] which is likely to increase in the range of 0.7-2.5 per cent in Q4.”