Direct tax collection records growth of nearly 11% in April-February; indirect tax collection up 22%

Highlights:

1. The government's net refunds of direct tax collection up to February this year has risen 10.7% to Rs 6.17 lakh crore as compared to same period last year

2. The net growth in Corporate Income Tax (CIT) collection is 2.6% while that in Personal Income Tax (PIT) collection is 19.5% 

3. Its collection of net indirect taxes up to February this year has recorded a growth of 22.2% more than the corresponding period last year

The government has witnessed a growth in collection of direct and indirect taxes for the April to February period of the current fiscal year 2016-17 (FY17). 

Its net refunds of direct tax collection up to February this year have risen 10.7% to Rs 6.17 lakh crore  as compared to the net collection for the corresponding period of last year, cited the Ministry of Finance in an official statement on Friday.

The Corporate Income Tax (CIT) and Personal Income Tax (PIT) too have witnessed a growth in terms of gross revenue collections during the said period. 

The government's gross revenue collection under the Corporate Income Tax (CIT) has registered a growth of 11.9% up to February this year. 

Similarly, its gross revenue collection under the Personal Income Tax (PIT), which also includes Securities Transaction Tax (STT), has registered a growth of 20.8% up to February month. 

"However, after adjusting for refunds, the net growth in CIT collections is 2.6% while that in PIT collections is 19.5%. Refunds amounting to Rs 1.48 lakh crore have been issued during April 2016-February 2017, which is 40.2% higher than the refunds issued during the corresponding period last year," the Ministry of Finance said in an official statement. 

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Furthermore, the government's collection of net indirect taxes up to February this year has recorded a growth of 22.2% more than the corresponding period last year. 

"The figures for indirect tax collections (Central Excise, Service Tax and Customs) up to February 2017 show that net revenue collections are at Rs 7.72 lakh crore, which is 22.2% more than the net collections for the corresponding period last year," cited the Ministry of Finance in a statement.

Till February 2017, about 90.9% of the Revised Estimates (RE) of indirect taxes for the fiscal year 2016-17 has been achieved, it added. 

On Central Excise tax, the government's net tax collections stood at Rs 3.45 lakh crore during April-February period as compared to Rs.2.53 lakh crore in the corresponding period of the previous fiscal year, whereby registered a growth of 36.2%.

Its net tax collections of Service Tax grew by 20.8% to Rs 2.21 lakh crore during April to February period of 2016-17 as compared to Rs.1.83 lakh crore during April-February period of 2015-16. 

The government's net tax collections of Customs during April to February period of 2016-17 stood at Rs 2.05 lakh crore as compared to Rs 1.94 lakh crore during the same period of the last fiscal,  whereby registered a growth of 5.2%.

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"During February 2017, the net indirect tax grew at the rate of 8.4% compared to corresponding month last year. The growth rate in net collection for Customs, Central Excise and Service Tax was 10.9%, 7.4% and 7.6% respectively during the month of February 2017, compared to the corresponding month last year," the Ministry of Finance said in a statement.

However, according to ICRA, the government's collection of net indirect taxes during the February month has grown at a slow pace as compared to 16.9% in January this year on back of decline in expansion of excise duty collections during the month.

"The chief factor causing the sequential slowdown in growth of the Government of India's net indirect tax collections in February 2017 is the sharp decline in expansion of excise duty collections to 7.4% from 26.3% in January 2017. From February 2017 onward, the favourable impact of the hikes in excise duty on fuels undertaken from November 2015 to January 2016 have dissipated. The pace of growth of excise collections is now expected to reflect a level that is closer to the rise in consumption of fuels, as well as industrial activity in the economy," ICRA principal economist Aditi Nayar said, in a press release on Friday. 

According to Nayar, the double-digit growth of customs duty collections in February 2017 may portend a substantial rise in gold imports.

The continued moderation in the pace of service tax growth in the recent months, suggests that discretionary spending is being curtailed, she added.

"The low growth of Corporate Income Tax net of refunds continues to pose a concern of a shortfall relative to the revised estimate for FY17," cited Nayar. 

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