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Context:

• The Central government collected a total of ₹19.58 trillion in direct tax revenue for the fiscal year 2023-24, marking a significant 17.7% growth compared to the previous fiscal year.

ALL ABOUT DIRECT TAXES: https://www.iasgyan.in/daily-current-affairs/direct-tax-48

Revised Estimates

• Initially, the government had estimated net direct tax revenue of ₹18.23 trillion for the fiscal year.
• However, this estimate was revised upwards to ₹19.45 trillion in the FY25 interim budget presented.

Personal Income Tax Collection

• A notable highlight of the direct tax revenue collection was the growth in personal income tax collection, which stood at ₹10.44 trillion for FY24.
• This figure indicates an impressive annual growth rate of 25.23%.

Corporate Tax Collection

• Tax collection from corporations also saw a healthy increase, expanding over 10% annually to reach ₹9.11 trillion for the fiscal year.

Direct Tax Buoyancy

• The provisional figures indicate a direct tax buoyancy of 1.9, suggesting that the growth in direct tax collection outpaced the rate of economic expansion during the fiscal year.

Share of Direct Taxes in Overall Tax Receipts

• Direct taxes are increasingly contributing a larger share to the Centre's overall tax receipts.
• In FY25, it is expected that direct taxes will account for 57.4% of the total, compared to the 54.4% projected in the FY24 budget.

Growth Projection for FY25

• For the fiscal year 2024-25, the government has assumed a growth rate of 13% for both corporate and personal income tax collection, as per the interim budget.
• However, given the 17.7% growth rate achieved in FY24, there is speculation whether this target will be revised upwards in the full year budget in July.

Other Financial Highlights

Economic Growth Projection

• The government has assumed a 10.5% economic growth rate in nominal terms for FY25.

Tax Refunds

• The Central Board of Direct Taxes (CBDT) issued tax refunds amounting to ₹3.79 trillion in the fiscal year ended March, showing a substantial increase of 22.7% over the refunds issued in the previous fiscal year.

Gross Direct Tax Collection

• Before adjusting for refunds, the gross direct tax collection for FY24 stood at ₹23.37 trillion, registering a robust growth rate of 18.48%.
• Within this, corporate tax revenue expanded by over 13% and personal income tax collection including Securities Transaction Tax (STT) expanded by 24.26%.

Goods and Services Tax (GST) Collection

• The fiscal year 2023-24 also witnessed strong Goods and Services Tax (GST) collection, with Centre and states reporting a gross GST collection of ₹20.18 trillion.
• This figure represents an 11.7% increase compared to the collections in the previous fiscal year.

ALL ABOUT DIRECT TAXES: https://www.iasgyan.in/daily-current-affairs/direct-tax-48

PRACTICE QUESTION Q. Direct taxes play a crucial role in India's fiscal policy and economic development. Discuss the role of direct taxes in promoting economic equity and stability in a country.