About 15% increase likely in direct taxes this fiscal and 17% in the next: finance secy
The government is quite hopeful of sticking to the fiscal consolidation path and achieving the tax revenue target fixed in the Interim Budget.
The gross tax revenue is estimated to grow at 17.15% in the revised estimates for 2018-19 and at 13.5% in 2019-20. The Budget has fixed the fiscal deficit target at 3.4% for both FY19 and FY20 and reiterated its commitment of achieving 3% target by FY21.
Speaking about the tax targets being realistic, finance secretary Ajay Narayan Jha in an interview with DNA Money said, "In direct tax, we have projected about 15% increase. Next year, it is about 17% increase. The trend is of about 16-17% growth. So if I factor that in, the direct tax collection should be slightly better than the projection."
Jha said that given the growth in the direct tax collections, there could be further improvement in the revenues. As far as the estimated growth in the Goods & Services Tax (GST) is concerned, "it is projected at 11.5%. That is because of the low base at which we stand today. But if I take the improved collection we may go up by a few percentage points above 11.5%-12%. So, that is an expectation. And that expectation is based on the overall growth in the economy," he said.
"Our first year average GST collection was around Rs 85,000-90,000 crore range. This year, this is around Rs 97,000 crore. And this should also be seen in the context large concessions and a number of rate adjustments that were done over the course of the year. But the last year's collection, which is the December collection reflected in January, raises the expectations that the GST may improve as we go along," he said.
On fiscal consolidation, Jha said that the government has been committed for long. "Last year, we had a problem because of 11 months of GST revenue instead of 12 months. Had it not been the case, we would have kept to the glide path. However, since we had only 11 months revenue, there was a slippage. This year if you discount the special package for the farmers, we have achieved 3.3% in 2018-19 and below 3.1% in 2019-20," he said.
Jha said this should be seen in the context of growth that is taking place.
"There is a slightly better buoyancy in taxation because of compliance, and there is also a greater formalisation of the economy. Then, there is also a prospect of GST collections stabilising and improving," he said.
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Jha said that given the growth in the direct tax collections, there could be further improvement in the revenues. As far as the estimated growth in the Goods & Services Tax (GST) is concerned, "it is projected at 11.5%. That is because of the low base at which we stand today. But if I take the improved collection we may go up by a few percentage points above 11.5%-12%. So, that is an expectation. And that expectation is based on the overall growth in the economy," he said.
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