I-T relief: Growth in direct tax receipts dips to 3.2%

NEW DELHI: Growth in gross direct tax collections moderated to 3.2% in the fiscal year up to July 10, from 4.9% three weeks ago, driven by a slowdown in non-corporation tax. Latest data released by govt estimated gross collections of Rs 6,64,807 crore between April and July 10.

Net direct tax collections - which means after refunds - are estimated to have declined 1.3% to Rs 5,62,827 crore on account of a 38% jump in refunds to Rs 1,01,980 crore. Up to June 19, when data was last released, refunds were estimated to have surged 58% to Rs 86,385 crore.

"While fall in net direct tax collection is largely driven by an increase in refunds issued this year, the overall fall in direct taxes can be explained by two major factors. On the personal tax front, the revised slab structure continues to offer relief to a large base of taxpayers, resulting in reduced tax liability. On the corporate side, higher capital expenditure has led to increased depreciation claims, thereby impacting immediate tax outflows. These measures, from expedited refunds to tax relief and capex incentives are aligned with the broader objective of stimulating economic activity and supporting long-term growth," said Samir Kanabar, tax partner at EY India.

FM Nirmala Sitharaman recently pushed senior officials to ensure that refunds are cleared. "The decline in net direct tax collections is primarily due to a rise in the volume of tax refunds processed," said Gouri Puri, partner at Shardul Amarchand Mangaldas & Co.

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