Centre's tax revenue at Rs 13.2 trillion in FY19, missed target by 11%

The collection in 2017-18 was 98% of the revised target

The central government missed its tax revenue target by 11 per cent in 2018-19. There was lower than expected collection from the central goods and services tax, personal income tax and Union excise duties. However, the customs collection target, raised during the year by 15 per cent over what was initially budgeted, was fully realised. This was perhaps also due to increases in tariffs on a range of items.

Similarly, the target for corporation tax, also revised upward during the year by a steep Rs 50,000 crore, was almost met.

Net tax revenue for 2018-19 (the financial year ended March 31) was Rs 13.2 trillion, short of the target by Rs 1.6 trillion, says data from the controller general of accounts, accessed by Business Standard. 

The collection in 2017-18 was 98 per cent of the revised target. Net revenue collection grew six per cent in FY19, compared to 13 per cent growth in FY18. When the full range of figures are clear, the government could have a widened fiscal deficit, with goods and services tax (GST) collection for the Centre also falling short. The government had set the fiscal deficit (gap between its revenue and expenditure) target at 3.4 per cent of the country's gross domestic product (GDP) for FY19. At the end of the year's 11th month, the deficit had exceeded the target by 34.2 per cent.

Total direct tax collection was Rs 11.4 trillion or 95 per cent of the target of Rs 12 trillion (also lower than the initially budgeted target of Rs 11.5 trillion).

The target for personal income tax (PIT) collection was left untouched but fell 10 per cent short at Rs 4.7 trillion. Officials said PIT target was unrealistic in the first place and they had asked for a reduction. 

For the current financial year, the personal income tax target is Rs 6.2 trillion, which means growth of 34 per cent. Much higher than even the 26 per cent growth in 2016-17, the year of demonetisation and concealed income declaration schemes, when collections shot up because people regularised their unaccounted income with higher levies.

On the other hand, corporation tax collection stood at Rs 6.6 trillion or 99 per cent of the Rs 6.7 trillion target.

In FY18, direct tax collection had exceeded the revised target of Rs 9.8 trillion, reaching Rs 9.95 trillion.

GDP growth in nominal terms fell from 12.6 per cent in the first three months of FY19 to 11.9 per cent in the second quarter and then 11 per cent in the third quarter. Real GDP growth in the third quarter (October-December) was 6.6 per cent, lowest in six quarters.

Central GST collection, part of the new indirect tax introduced in July 2017, fell nine per cent short of the revised collection target at Rs 4.5 trillion; the official aim was Rs 5 trillion on revision. Officials attribute it to rate rationalisation (cuts) on a slew of items during the year. In July the GST on small screen TVs, refrigerators and washing machines was cut to 18 per cent, from 28 per cent. In November 2017, the rates for 178 items were reduced similarly.

As mentioned earlier, customs duty collection was on target at Rs 1.3 trillion in revised estimates. In September last year, basic customs duties were raised  on 19 items, including air-conditioners, refrigerators, washing machines, footwear, jewellery, furniture fittings and tableware, to protect against import from China.  

A basic tariff of five per cent was imposed on aviation turbine fuel to rein in the current account deficit. In October, tariffs were raised on 15 products in the telecom and communication equipment segment, up to 20 per cent. In all, indirect tax collection was a tenth short of the revised estimate for the financial year at Rs 9.4 trillion.

The amount from Union excise duties was 89 per cent of the revised estimates at Rs 2.31 trillion. Petroleum and alcohol are outside the purview of GST and excise duty is imposed on these items.