homeeconomy NewsA turning point in the government's fiscal outlook — 24% surge in September advance tax collection
A turning point in the government's fiscal outlook — 24% surge in September advance tax collection
The surge in advanced tax collections by the center, particularly the impressive 24 percent growth as of mid-September, is a promising sign for India's fiscal health. Although challenges remain, including concerns about income tax collections, the government's chances of meeting its budgetary targets have substantially improved. As the fiscal year progresses, close monitoring of tax revenues will be essential to ensure sustained economic growth and financial stability.
As of September 16, the central government's advance tax collections have recorded a remarkable 24 percent increase compared to the same period last year. This surge is a stark contrast to the modest 14 percent growth seen in the first quarter of this fiscal year, as reported by official sources. The 24 percent growth actually signifies a turning point in the government's fiscal outlook.
This substantial increase specifically pertains to advance taxes collected by mid-September, and it closely aligns with the deadline of September 15 for the second tranche of direct taxes.
What makes this figure particularly crucial is the context that it provides. In the initial months of the fiscal year, the government was grappling with a mere 14 percent increase in tax collections, raising concerns about meeting budgetary targets. To put this into perspective, the overall gross tax revenues for April to August had only risen by a meager 2.6 percent, significantly below the anticipated growth rate of around 10.4 percent.
This sluggish growth in overall tax revenues from April to August had set off alarm bells, leading to speculation about potential downward revisions in the growth estimates. It left many wondering whether the government would be able to meet its budgetary commitments, especially concerning direct taxes.
However, the recent data offers a glimmer of hope. As of September, the tax revenue stands at a commendable 23 percent higher, amounting to a total of 8.64 trillion. It's important to note that this figure represents the net tax collection, and analysts are eagerly awaiting the release of gross tax revenue numbers to assess the complete picture. Nevertheless, this substantial increase significantly reduces concerns about the government falling short of its budgetary estimates.
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It's worth mentioning that these figures do not account for income tax collections, which presented a mixed picture. In July 2023, income tax collections were lower compared to the previous year. While this does introduce an element of caution, the overall positive trend in advanced tax collections and the government's efforts to stimulate economic growth provide a more optimistic outlook for fiscal stability.
(Edited by : C H Unnikrishnan)
First Published: Sept 21, 2023 11:17 AM IST
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