While the government is optimistic about meeting the tax collection as well as fiscal deficit targets for the current year, experts say it may not be easy.
The Budget has fixed the fiscal deficit target at 3.4% of the Gross Domestic Product (GDP), while the gross tax revenue is estimated to grow at 17.15%, as per the revised estimates for 2018-19. Though the Goods & Services Tax (GST) target has been revised downwards by Rs 1 lakh crore, the government may still miss the indirect tax, including customs and other duties,D K Srivastava, chief policy advisor at EY, said, "There is a concern that the government is so optimistic. This is because they have provided for still high GST revenues despite reducing it by Rs 1 lakh crore in the revised estimates."
As far as direct tax targets are concerned,"to achieve the projected target of corporation tax collection, it will have to grow at 24% in the remaining months of the year. In the past four years, however, the corporation tax has grown at a mere 10% in the last three months of a fiscal, Srivastava said, adding that the corporation tax revenues have grown at 14% till December so far.
On the personal income tax side, "There is a growth of 15% up to December while you need a growth of 55% in the remaining period of FY19 to achieve the target. The past trend shows the it grew at 15% in the remaining three months of a financial year. So in the case of direct tax, very optimistic assumptions have been used," he said.
"The tax revenue targets look stiff, although the government has appropriated around Rs 38,000 crore of GST compensation cess," said Devendra Kumar Pant, chief economist at India Ratings & Research.
"Fiscal deficit will also depend on how the numbers- Reserve Bank of India's (RBI) interim dividend and capex figures- stack at the end of the year. The expectation is that the government may also get some portion of RBI's retained profit from the last two years, which is likely to be around Rs 25,000-30,000 crore. The government is also likely to have some buffer from lower capex in the fourth quarter, which as per revised estimates and first nine month expenditure is estimated at Rs 1.05 lakh crore," he said.
Apart from these, the government will also need to achieve the disinvestment goal of Rs 80,000 crore to meet the fiscal deficit target. So far, it has raised only Rs 35,100 crore from asset sale in the current year.
There are apprehensions that the slippage on fiscal deficit could be more than the revised figure of 3.4% for the current year, considering that the government may have overestimated the tax revenue growth for 2018-19.
However, the government finds it quite achievable.
Finance secretary Ajay Narayan Jha told DNA Money that there could be further improvement in the revenues, given the growth in the direct tax collection. The indirect tax revenue target, too, looks achievable as the expectations are 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 front, he feels that th'including customs and other duties e government will be on track to meet the commitment of achieving 3% fiscal deficit target by FY21.
"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, adding that this should be seen in the context of current growth.
"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.
THE MATH
Rs 10.45 L cr – GST target for this fiscal, likely to be missed
Rs 50,000 cr – Increase in direct tax collection looks ambitious
Rs 35,100 cr – Raised from disinvestment in the current year, target is Rs 80,000 crore
24% – Corporation taxes have to grow for the rest of the year to meet the target
55% – Increase needed in remaining fiscal to meet personal income tax target
The silver lining
Rs 25,000-30,000 cr – RBI dividend was around in last two years
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 "Fiscal deficit")
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