Tax mop-up hits record in FY22, Tax-to-GDP ratio peaks in two decades

New Delhi, April 8: The Centre had bumper tax mop-up in FY22 despite Covid waves, cut in excise duty on auto fuels and headwinds coming from geo-political tensions. Briefing media here on Friday, Revenue Secretary Tarun Bajaj said that total gross tax collection during financial year 2021-22 grew 34% year-on-year to Rs 27.07 lakh crore and Tax-to-GDP ratio was the highest in over two decades. The Tax-to-GDP ratio measures a country’s tax revenue relative to its GDP. A higher Tax-to-GDP ratio reflects the better financial position of the country. On the question of the possibility of cutting duties on petrol and diesel, the top revenue officer however sounded non-committal. “On the excise duty reduction on petroleum products, if and when we do it, we will communicate to you,” Bajaj said. Direct tax collection, which primarily comprises of corporation tax and income tax, saw a record increase. As regards indirect taxes, custom duty on mobiles, motor vehicles, gold and edible oils contributed significantly. On the GST side, major contributors were iron and steel, motor vehicles, tobacco and cement. “In services we had very good growth in financial services, IT and management services,” Central Board of Indirect Taxes and Customs (CBIC) Chairman Vivek Johri said. As per data released by Finance Ministry, the Centre’s gross direct tax collection was Rs 14.10 lakh crore in 2021-22, up 49% year-on-year. During the same period, total indirect tax collection comprising of GST, customs and excise among others, stood at Rs 12.90 lakh crore registering a year-on-year growth of 20%. As compared to 2019-20, the compound annual growth rate (CAGR) for tax revenue for 2021-22 is 16.2% and as compared to 2018-19, the CAGR for 2021-22 is 9.2%. Revenue Secretary Bajaj thanked taxpayers for paying tax on time and also filing returns within due dates. “Thanks to taxpayers who have during very difficult times shown resilience in terms of running their businesses, going to offices and also filing their returns on time and paying taxes in times. Economy has shown resilience and rebounded very robustly (and) that is also one of the factors,” Bajaj said. He noted that when year 2021-22 started and the government came up with budget on February 1, 2021 the budgeted estimate (for revenue) was Rs 22.17 lakh crore, up 17% more than the revised estimate figures of the previous year. “As against Rs 22.17 lakh crore, as of today we are somewhere close to Rs 27.07 lakh crores which is an increase of almost Rs 5 lakh crore. Let me say that these figures are tentative at the moment. They are likely to change and I am hoping that they will change on the upside and not on the downside. So, we might have further improvements in these figures as the final figures actually arrive. So, this is about 34% more than what was mentioned in the budgeted estimate,” said the Revenue Secretary. Talking about the direct taxes, Bajaj said that the corporation tax has grown by 56.1% during the year and the taxes on income which is personal income tax has grown by about 43%. He further said that the overall direct taxes had grown by 49% which is perhaps one of the highest for a long time. On the indirect taxes, Bajaj said that the customs duty (collections) had gone up by 48%. “This is also reflected by very robust export-import data that have come out recently. While the Union excise duty remains the same as it was last year so there is no growth. In fact, there is de-growth of 0.2% and the CGST which was an element of challenge for us ….. this has grown by almost 30% and total indirect taxes have grown by 20%,” he said. “We keep talking about Tax-to-GDP ratio and there is a mention by economists and commentators that Tax-to-GDP ratio in the country is very low and there is need… unless this goes up, we will not be able to cover up our welfare programs. Let me also share with you that it was 10.3% in the last year (2020-21) and this year it is 11.7%. So, this 11.7%, we have gone back till 1999, we find that since 1999 this is the highest,” he added. Among various tax zones, Mumbai accounted for about one-third of the total tax collection followed by Karnataka & Goa (12%) and Delhi (12%). Trends in E-way bill generation and filing of GST returns also posted impressive performance. (UNI)