The government has collected only Rs 7.3 trillion in the direct taxes as of January 23. (Photo Credit: Representational Image)
New Delhi :
The Narendra Modi government’s move to reduce corporate tax rates and the sluggish economic growth is likely to result in the fall in the direct taxes for the first time in at least last two decades, according to a Reuters report, citing over half a dozen senior tax officials. The Modi government was targeting the corporate and income tax collection of Rs 13.5 trillion for the current financial year ending March 31 – a 17 per cent increase against the previous fiscal year.
However, due to a sharp decline in demand and lower investment and jobs has dented the direct tax collection target, prompting the government to forecast just a five per cent growth, the report said. According to a senior tax official, the government has collected only Rs 7.3 trillion in the direct taxes as of January 23. This is more than five per cent below the amount collected by the same time during the last fiscal year.
Several tax officials interviewed by Reuters said that direct tax collections in the financial year ending March 31 were likely to fall below the 11.5 trillion collected in 2018-19. "Forget the target. This will be the first time that we'll see a fall in direct tax collection ever," the agency quoted a tax official in New Delhi as saying.
The official estimated the direct tax collections this financial year at least roughly per cent below the fiscal 2019. The shortfall may force the Modi government to resort to borrowing to meet expenditure commitments as direct tax collections account for nearly 80 per cent of the government's annual revenue projections.