Amidst the slowest economic growth rate in 6 years and 45 years high in terms of unemployment, India faces another bad news. The corporate and income tax (direct tax) collection is set to fall.
As per inputs from Reuters, the fall would be first in 2 decades. The inputs are based on an estimation of over a dozen senior tax officials. The government was targetting direct tax collection of Rs 13.5 lakh crore ($189 billion) by 31st March. A 17% increase over the previous fiscal.
However, the tax collection is only Rs 7.3 lakh crore as of January 23. This is more than 5.5% below the amount collected by the same point last year. Sharp decline in growth has hit the businesses hard and has effected investments and job growth. The result is the lowest rate in 11 years and the fall in tax collection. The cut in corporate tax last year is also pointed as one of the reasons for fall.
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Direct taxes typically account for about 80% of the government’s projections of annual revenue. A shortfall in collection means the government would have to resort to borrowings to meet the expenditure. As per tax officials, they would be happy if they could reach anywhere near the last year’s collection.
Inputs from Times of India
