Corporation tax collections decline 8.19% till June 17 this year: CAG

The corporation tax collection declined 8.19 per cent in the first quarter of 2023-24 until June 17 versus the corresponding period a year ago. This was despite 17.68 per cent growth in the advance corporation tax mop-up during the period under review.   

Corporation tax receipts stood at Rs 1.57 trillion as on June 17 of FY24, against a Rs 1.71 trillion mop-up as on June 16 of FY23.

The advance corporation tax collection, on the other hand, rose to Rs 92,784 crore in the first quarter of FY24 (until June 17), against a Rs 78,842-crore mop-up in the corresponding period (until June 16) of the previous financial year.

 

In fact, advance tax from corporations prevented a sharper decline in corporation tax collection. Otherwise, corporation tax receipts declined around 39 per cent to Rs 56,531 crore in the first two months of FY24, from Rs 78,525 crore in the corresponding period of the previous year, according to the Controller General of Accounts.

The FY24 Budget has projected a corporation tax mop-up of Rs 9.23 trillion, up 10.5 per cent from Rs 8.35 trillion in 2022-23 (Revised Estimates).

As such, the mop-up until June 17 accounted for 17 per cent of the Budget Estimates (BE) for the entire FY24. The collection under this head until June 16 of FY23 was 23.75 per cent of the BE and 20.48 per cent of the RE for the entire 2022-23.

While the finance ministry shared the total direct tax collection figure for the previous year until June 17, it did not share the break-up until that date. The figures for the corresponding period of FY23 were available until June 16. The fall in corporation tax receipts would have been a bit more than 8.19 per cent had the head-wise figures for direct tax collection for June 17, 2022, been made available.

To a query on the break-up for the previous year until June 17, the Central Board of Direct Taxes (CBDT) gave no reply. It also did not reply as to why the corporation tax mop-up was down this year.

Banks and consumer companies are expected to have driven first-quarter earnings, boosted by accelerating economic activity, easing input costs, and decade-low bad loans. The outlook for the nation’s software exporters is clouded because of global headwinds, according to a Bloomberg report. 

It is the personal income tax that drove the direct tax collection during the first quarter (until June 17) this financial year. Revenue from personal income tax, including securities transaction tax (STT), rose to Rs 2.22 trillion, from Rs 1.68 trillion a year ago.

This resulted in 11.8 per cent growth in the total direct tax collection at Rs 3.79 trillion, against Rs 3.39 trillion a year ago. This growth would be a bit slower at 11.18 per cent, if we compare the figure with Rs 3.41 trillion as on June 17, 2022.

Growth in advance personal income tax was muted at 8.19 per cent during the first quarter of the current financial year (until June 17). Advance personal income tax yielded Rs 23,991 crore in Q1FY24 until June 17 against Rs 22,175 crore in Q1FY23 until June 16. 

This resulted in the total advance tax collection growing by 15.6 per cent to Rs 1.17 trillion (until June 17, 2023), from Rs 1.01 trillion (as on June 16, 2022). This growth would decline to 13.7 per cent if we take the advance tax collection at Rs 1.03 trillion as on July 17, 2022.