ECONOMY

New Delhi, June 16 | Updated on: Jun 16, 2022

Amount to increase significantly once bank reconciliation done

The first instalment of advance tax collection for both corporate and personal income tax has recorded impressive gains, initial data reveals. While growth in corporate tax was around 46 per, personal income tax gains surged over 52 per cent. The collection through corporate tax was around ₹26,800 crore, while personal income tax totaled up to around ₹15,800 crore.

“This is the initial data and is expected to rise significantly further once bank reconciliation is done,” a senior government official said. Wednesday was the due date for payment of the first advance tax instalment. Initial data also showed that overall direct tax collection registered very high growth. These numbers have come at a time when overall economic growth is being questioned. Also, producers’ inflation, measured by the Wholesale Price Index (WPI), is the highest in nearly four decades.

Advance Tax

Advance tax is the income tax paid in advance for the income earned in a particular financial year. Usually, the tax is to be paid when the income is earned. Still, under provisions for advance tax in the statute, the payee has to estimate the income for the entire year. Based on this estimate, the tax is paid at specific time intervals. As per section 208 of the Income Tax Act 1961, every person whose estimated tax liability for the year is more than or equal to ₹10,000 after TDS or TCS is liable to pay advance tax. Those who are excluded from paying advance tax are senior citizens who are above the age of 60 and do not have any income from a business or profession.

Advance tax can be paid in four instalments by the 15th day of June, September, December, and March. On or before June 15, 15 per cent of advance tax is payable. By September 15, it should be 45 per cent of the payment minus the amount already paid. By December 15, it will be 75 per cent of the advance tax already paid and the balance due by March 15. Non-payment of advance tax will attract interest.

Direct Tax collection

Meanwhile, initial data showed that direct tax collection in the first 75 days of the current fiscal, 2022-23 or FY 23, reached over ₹3.10 lakh crore, which is nearly 22 per cent of the budget estimate. In the budget, Finance Minister Nirmala Sitharaman pegged direct tax collection at ₹14.20 lakh crore for FY23. This includes ₹7.20 lakh crore from corporate tax and ₹7 lakh crore from personal income tax.

Last week, Revenue Secretary Tarun Bajaj said that tax revenue collections in the ongoing fiscal year were expected to be “far better” than the budget estimates. “While we are starting the new financial year and are in the month of June, I would need another month to be sure as to how we are going ahead with the revenue figures,” he had said.

In the last fiscal year, direct taxes grew by 49 per cent. The tax-to-GDP ratio in FY22 jumped to 11.7 percent, the highest since 1999. In FY21, the ratio was 10.3 per cent. Overall tax collections soared to a record high of ₹27.07 lakh crore last year, compared with the Budget estimate of ₹22.17 lakh crore.

Published on June 16, 2022