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With the Centre likely to collect direct taxes exceeding its target, the Union finance ministry might go for a sober 9-11% increase in net tax revenue receipts in FY25 over and above the budget estimates for FY24, The Economic Times has said in a report. On February 1, the finance minister is supposed to place an interim budget ahead of the general elections this summer.
Significantly, it was mentioned in the second week of January that direct tax collections for FY24 would exceed estimates mentioned in the Union budget. Rating agency ICRA, for example, has pegged a collection of about Rs 1 lakh crore in excess of the estimate. ICRA has also said that there could be a 18% growth of direct tax mopped up this year over the provisional numbers for FY23.
The Centre could end up with a net tax revenue of Rs 25-26 lakh crore, the report said. For the current fiscal year, the Centre budgeted a net tax revenue Rs 23.3 lakh crore.
“The target for net revenue receipt for the next fiscal year will be modest, ranging between 9-11%,” a senior official told the newspaper. Explaining the rather sober target, the official added, “It is better to keep it understated considering that global crisis is far from over.”
The sober growth rate can also be explained by the high base. Incidentally, tax receipts surpassed the revised estimates in the past two years.
For FY24, post-devolution to states, the revised estimate for net tax revenue receipt, is expected to be at the same level as the budget estimate. This estimate factors in a possible shortfall in excise duty revenue, said the report.
The budget estimate under the head of excise duty for FY24 is Rs 3.39 lakh crore but the actual collection might fall short by Rs 45,000 crore. For FY25, the excise collection target is likely to be about 3 lakh crore.
The gross tax revenue target that the Centre had set for itself in FY24 is Rs 33.6 lakh crore. The states are supposed to get Rs 10.2 lakh crore out of this kitty. Therefore, following the payout to the states, the Centre’s is expected to be left with a tax revenue of Rs 23.30 lakh crore. This amount is higher than that in FY23 by 11.7%.
Experts seem to be more optimistic. Goldman Sachs has said in a report that income taxes and corporate tax are likely to rise by 15% in FY25. It has also stated that GST revenue could leap by 11%.
On January 10, the government’s net direct tax collections rose to Rs 14.7 lakh crore, and it recorded a 19.4% rise compared to the same period in FY23. The amount was 80% of the budgeted direct tax target of Rs 18.22 lakh crore