By Satish Singh
Despite the economy being affected by the second wave of Corona virus, the direct tax collection so far in the current financial year has been almost double compared to the same period of the previous financial year. The tax collection registered a splendid growth even before the first instalment of advance tax payment was deposited. This is likely to increase further if advance tax deposit. However, the Goods and Services Tax (GST) collection was lower last month due to the impact of economic activities.
Net direct tax collection after refund till June 11 this year stood at Rs.1.62 lakh crore, an increase of 85 percent over Rs.0.87 lakh crore in the same period of last year. At the same time, it was 33 percent more than the same period of the pre corona period year 2019-20. It is noteworthy that in the financial year 2019-20, tax collection was Rs. 1.22 lakh crore. The Direct tax collection includes both income tax and corporate tax.
The reasons for the increase in direct tax collection are direct tax dispute resolution scheme “Vivad se Vishwas”, lower tax refunds, improved compliance, and enforcement etc. The Gross tax collection stood at Rs.1.93 lakh crore, which is an increase of 54 percent over the same period of last year. In the year 2021, the refunds declined by 17 percent to Rs.31,000 crore. During this period of last year, refund of Rs.37,300 crore was given to the taxpayers. The CBDT had received Rs.54,005 crore till March under the “Vivad se Vishwas” scheme. However, in view of the second wave of corona virus, the period of payment under this scheme was extended to June 30, 2021.
Tax collection in Mumbai increased by 80 percent to Rs.48,000 crore from Rs.27,000 crore during the same period of last year. Tax collection in Delhi increased by 67 percent to Rs.20,000 crore. In the same period of last year, Delhi received direct tax of Rs.12,000 crore. Similarly, direct tax collection has increased by 120 percent in Chennai and 150 percent in Pune. According to experts, strong exports and cost-cutting by companies have led to a rise in direct taxes. By the way, a major reason for the increase in direct tax is not to have much adverse effect on direct tax collection due to the non-imposition of nationwide lockdown as compared to last year.
GST collection in May was the lowest in 8 months at Rs.1.02 lakh crore. However, in the month of May, the country’s exports grew by 67.39 percent to $ 32.21 billion as compared to the same period of last year. During the financial year 2020-21, indirect tax collection in the country increased by 12 percent to Rs.10.71 lakh crore. This increase has been there even after the 8 percent reduction in GST. Indirect tax collection last year stood at Rs.9.54 lakh crore. The Indirect tax collection figures have been better on the back of increase in customs duty and taxes on petrol and diesel and some pick-up in its consumption in the second half of 2020 & first half quarter of 2021. In the first 9 months of the financial year 2020-21, the central government got Rs.2.63 lakh crore in this item. Tax collections stood at 8.2 percent higher than the revised estimate of Rs.9.89 lakh crore. Although the figures may change later due to resolution of some tax issues which are right now stuck due to some legal issues. It is expected that the change is expected to be positive. Due to a pick-up in indirect tax collections, the total tax collection in FY21 stood at Rs.20.16 lakh crore, slightly higher than Rs.20.05 lakh crore in the previous fiscal. It is worth noting that even after 10 percent reduction in direct tax collection, the overall tax collection has remained high. Indirect taxes include GST, excise duty and customs duty. In FY21, Rs.1.32 lakh crore was collected as customs duty, an increase of 21 percent against Rs.1.09 lakh crore in the previous financial year. The Collection from Central Excise and Service Tax (Arrears) also increased by 58 percent to Rs.3.91 lakh crore during the period under review.
Amidst the increase in direct and indirect taxes, the good news is that the Indian Meteorological Department (IMD) has predicted a good monsoon this year. Also, now IMD will forecast the weather monthly, which will help the farmers and the administration to keep the agricultural preparedness on the basis of accurate forecast of rainfall distribution every month.
IMD will start giving Long Range Forecast (LRF) on monthly basis for the June to September period in the monsoon year 2021. Till now the Meteorological Department was giving LRF on quarterly basis during monsoon. Explain that the IMD first gives the initial estimates, which are usually announced in the middle of April and in June the second phase estimates are revised as per necessity. The Meteorological Department makes region-wise forecasts for four main regions-Northwest, East and Northeast, Central and South Peninsular parts and also revises the forecast if needed. Thereafter, IMD forecasts for the remaining two months of Monsoon in the month of August.
Presently, IMD is not giving accurate rainfall and its distribution forecast for June, July, August, and September on month wise and region wise basis. Apart from this, separate rainfall forecasts are also not being given by IMD for the Monsoon rain dependent states, viz., Gujarat, Maharashtra, Madhya Pradesh, Rajasthan, Chhattisgarh, Odisha, and Jharkhand.
Due to the lack of these information, planning and management are not being done properly at the administrative level regarding agricultural works. Agriculture work in these states of the country is completely dependent on monsoon. However, now with this new initiative of the Meteorological Department, the economic face of these states based on rain for agriculture will change a lot. IMD will take the help of numerical forecasting techniques available in the world along with the existing technology for forecasting, which will further improve the accuracy of its forecast.
It can be said that economic activities have been less affected by the second wave of corona virus than last year. There has been an increase in the collection of direct and indirect taxes even in the Corona period. The IMD has forecasted a good monsoon in this year. The announcing of the weather forecast on a monthly basis will also expected to strengthen the economy, as the availability of forecasts technique & expertise every month from June to September will help administrators and farmers to plan agricultural operations in better way, which will also boost the economy.
(Author is Chief Manager at State Bank of India, Mumbai. The views expressed are personal opinion of the author. He can be reached at satish5249@gmail.com and singhsatish@sbi.co.in.)
