The Centre beat all its estimates of revenue collection in the financial year ended on March 31, aided by better indirect tax mop-up, strict compliance measures, and recovery in most sectors following the successive waves of the Covid-19 pandemic.
India’s gross revenue collection soared to a record high of Rs 27.07 trillion in FY22, while the tax-to-GDP ratio jumped to an over two-decade high of 11.7 per cent, the finance ministry said on Friday. The total mop-up was 34 per cent more than the Rs 20.27 trillion collected in FY21.
About 49 per cent growth was registered in direct tax collection and 20 per cent in indirect tax collection in FY22.
“It signifies a robust recovery in the economy. This was also supplemented with better compliance efforts in taxation. Various efforts were taken by the tax administration on direct as well indirect taxes to nudge higher compliance through the use of technology and artificial intelligence,” the ministry said.
While briefing on collection figures, Revenue Secretary Tarun Bajaj said the overall tax buoyancy showed a “'healthy, robust figure”.
The tax buoyancy came in at about 2, which means the rate of growth in tax collection was nearly double that of nominal GDP (gross domestic product) growth.
The tax-to-GDP ratio in FY22 rose to 11.7 per cent -- the highest since 1999. In FY21, the ratio was 10.3 per cent, Bajaj pointed out. “Direct taxes are more than indirect taxes (in 2021-22) and I hope this trend will continue in the coming years,” Bajaj said.
The tax revenue in the Union Budget for 2021-22 was estimated at Rs 22.17 trillion, as against the revised estimates of Rs 19 trillion, with growth of 17 per cent, according to the ministry.
Within direct taxes, corporation tax grew by 56.1 per cent and personal income tax by 43 per cent. In indirect taxes, customs duties grew by 48 per cent, reflecting robust export and import.
On the Ukraine-Russia crisis, Bajaj said it is worrisome but we need to see how the economy performs, particularly commodity prices and their impact on supply chains.