DNA Money Edit: DeMo powers direct-tax collections

Higher personal advance-tax collection of 21.6% during the first nine months of the current fiscal shows expansion of tax base following demonetisation. Corporate advance tax collections grew 10.9%. Interestingly, growth in personal advance-tax has surpassed the increase in payment of corporate advance-tax. The jump in personal tax collections can also be attributed to the simplification in the compliance processes for small business entities and increase in the threshold limit for the Presumptive Taxation Scheme under Income-tax and Composition Scheme under the goods and services tax (GST).

Total advance-tax collections grew 12.7% to Rs 3.18 lakh crore. Direct-tax collections during the nine months have jumped 18.2% as the government struggles to meet the fiscal deficit target amid a massive drop in tax collections after the GST rollout. The growth in direct tax collections could offset the shortfall in revenues from GST and fund government spending in key sectors of the economy. Net direct-tax collections for the nine months rose 18.2% to Rs 6.56 lakh crore, 67% of the budgeted direct-tax collections of Rs 9.8 lakh crore for 2017-18.

The share of income tax at 67% is significantly higher as compared to an average share of around 53% over the last four years. Moreover, it allays fears of a slowdown in taxpayer base.