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Alarming trend in Direct Tax collection: Hitting the target Vs Missing the bus

By IndianMandarins- 10 Jan 2020
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While re-calibrating and fixing direct taxes collection target for FY 2019-2020 at Rs 13.35 lakh crore, CBDT chief P C Mody had said last year that it was difficult but achievable. But even after the completion of three quarters of FY 2019-2020 the collection figures of Direct Taxes is nowhere close to it.

Indianmandarins has reliably learnt that on completion of third quarter (ending 31.12.2019) the all India collection of Direct Taxes is far less (- 6%) than the collection as compared to the corresponding period last year. The deficit is primarily attributed to the weak performance of metro cities. The down trend may be shown as follows:

Mumbai: (-5%)
Delhi: (-10%)
Bangalore: (-7%)
Chennai: (-2%)
Jaipur: (-20%)

It is to be seen whether CBDT would be able to hit the target of Rs 13.78 lakh cr or even maintain the previous year’s figure. The collection figures are clear indicator that relatively smaller cities have to play critical role in the wake of weak contributions by metro cities and country's commercial capitals.  


FACTS AND FACETS:

  1. FY 2019-2020: In view of historical growth rate in collections in the past three years FinMin had initially set the at Rs 13.78 lakh crore for FY 2019-20. After Budget deliberations it was re-calibrated and fixed at Rs 13.35 lakh crore.
  2. FY 2018-2019: I-T department had collected Rs 11.37 crore during FY 2018-19 against its initial target of Rs 13.80 lakh crore, a shortfall of around Rs 83,000 crore or 7.4 percent of the Rs 12 lakh crore collection target. The collection was, however, 18.3 percent higher than FY 2017-2018.
  3. The revenue collection targets are set by the Union Finance Ministry in consultation with CBDT which frames policy for the IT Department.
  4. The direct tax collection bucket comprises personal income tax, securities transaction tax and corporate tax.
  5. In 2019 FinMin Nirmala Sitharaman’s move of bringing almost all the companies in the lower tax net was widely appreciated by the business world.

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