Informist, Wednesday, Nov. 13, 2024

--Govt source: Hopeful of exceeding FY25 direct tax collection target
--Govt source: Sticking to FY25 direct tax projections for now
--Govt source: Middle class' tax burden reduced substantially in last 10 yrs
--Govt source: Nearly 74% taxpayers shifted to new tax regime since rollout

NEW DELHI – The government is hopeful of exceeding the direct tax collection target it has set for the current financial year that started April, a senior finance ministry official said Wednesday. The Budget has projected total tax collections for 2024-25 (Apr-Mar) at INR 38.40 trillion, up 10.8% from the previous year. Of this, the finance ministry aims to collect INR 22.07 trillion as direct taxes, which include corporate and income taxes.

"As of now we are hopeful that we will be able to meet the Budget target and if the economy continues to perform like this, we may exceed the aim as well," the official said. The government’s focus is no longer on enforcement, but on taxpayers' participation, the official said.

Net of refunds, the government has collected INR 12.11 trillion for the period from Apr. 1-Nov. 10, which is 15.4% higher than the previous year, the finance ministry had said in a release Monday.

Though the tax collections are robust, particularly on the back of high personal income tax collections, the official said the tax burden on the middle class has substantially gone down in the past 10 years.

Income tax paid by those earning between INR 700,000 to INR 1 million was INR 43,000 in 2014, as against nil now. On the other hand, income tax paid by higher income bracket taxpayers have gone up during the same period, the official said. In 2014, people with incomes above INR 5 million paid tax worth INR 185,000, as against a sharply higher INR 939,000 now.

Of the total INR 12.11 trillion direct tax collected till Nov. 10 in FY25, net corporate tax collections were INR 5.105 trillion and non-corporate tax collections were INR 6.619 trillion.

Corporate tax collections and non-corporate tax collections for the said period grew 6.5% and 20.7% on year, respectively. Non-corporate tax includes taxes paid by individuals, Hindu Undivided Families, firms, association of persons, body of individuals, local authorities, artificial juridical person.

The official also said that about 74% of the taxpayers have already shifted to the new tax regime so far. Announced in 2020, the new simplified tax regime offers lower tax rates but has very few deductions. Though the rates are higher under the old regime, taxpayers can claim deductions under various sections of the Income Tax Act.

The government has been offering various sops to wean taxpayers from the old regime and take up the new regime. The Union Budget for 2024-25 provided tax savings of up to 17,500 rupees under the new regime. Currently, both the tax regimes are running simultaneously and Finance Minister Nirmala Sitharaman had on Jul. 23 said the government is yet to decide on the sunset date for the old tax regime. End

Reported by Priyasmita Dutta and Sagar Sen

Edited by Deepshikha Bhardwaj

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