Direct Tax Collections Show Modest Growth

NEW DELHI: The growth in gross direct tax collections has seen a moderation, dropping to 3.2% in the fiscal year up to July 10, from 4.9% just three weeks prior. This slowdown is primarily attributed to a decrease in non-corporation tax revenues. Government estimates place gross collections at Rs 6,64,807 crore between April and July 10.

Net Collections and Refunds

Net direct tax collections, after accounting for refunds, have declined by 1.3% to Rs 5,62,827 crore. This downturn is largely due to a 38% increase in refunds, totaling Rs 1,01,980 crore. Comparatively, by June 19, refunds had surged by 58% to Rs 86,385 crore.

Expert Insights

Samir Kanabar, tax partner at EY India, explains, "The revised slab structure continues to offer relief to a broad base of taxpayers, reducing their tax liability. On the corporate side, heightened capital expenditure has led to increased depreciation claims, affecting immediate tax outflows." These measures are seen as part of a broader strategy to stimulate economic activity and foster long-term growth.

Government's Stance on Refunds

Finance Minister Nirmala Sitharaman has recently emphasized the importance of expediting refund processes. Gouri Puri, partner at Shardul Amarchand Mangaldas & Co, notes, "The decline in net direct tax collections is primarily due to a rise in the volume of tax refunds processed."