In a country of more than 130 crore, India has around eight crore people who earn enough to pay direct taxes including TDS deducted from salaries and income tax as well as corporate tax. To make things simpler for them the chairman of an economic advisory to the Prime Minister has also suggested a similar rate for personal income tax and corporate tax. As the Central Board of Direct Taxes (CBDT) is pushing for a common income tax return irrespective of the kind of person or income, direct tax collection in India has jumped by 31 per cent on a year on year basis.
Personal income contributed more than corporate taxes
According to the Ministry of Finance, Indians paid Rs 10.45 lakh crore in direct taxes, which was the gross collection till November 10. The net collection, removing the refunds, came down to Rs 8.71 lakh crore for the period, which is still 25 per cent higher than the same last year. More taxes came from salaried people since personal income tax growth was at 40 per cent as compared to 22 per cent for corporate income tax.
Can it surge past expectations?
Last year, personal income tax had surpassed the corporate tax revenue for the first time after more than a decade. From April to November this year, the refunds also saw a bigger spike than taxes, with a 61 per cent jump to Rs 1.83 lakh crore. With months to go, the collection could meet the government’s estimate of Rs 14.20 lakh crore for this fiscal year, compared to 14.10 lakh crore this year.
What makes direct taxes different?
As opposed to GST, which is collected by the seller on every purchase people make or every service that they use, direct taxes include those on individual income such as personal income tax, corporate tax and tax deductible at source on salaries. GST also has been consistently above the Rs 1 lakh crore mark for more than a year, and apart from that excise duty and customs are also indirect taxes. Last year, the revenue from indirect taxes had surpassed direct tax for India, which depends on taxation for 80 per cent of its income.