The Centre has appropriated an additional Rs 78,000 crore in net (post-devolution) tax revenue in FY21, with all major tax heads yielding revenues substantially higher than the respective revised estimates (RE) shown in the Budget. According to the second advance estimate of national income, the fiscal deficit for the year may be 46 basis points lower than the budgeted 9.5 percent of nominal GDP if other inflows and outflows adhere to budgeted figures.
According to two statements issued by the Finance Ministry this month, gross tax receipts (GTR) — net of refunds but before transfers to the states — last financial year were up Rs 1.22 lakh crore, or 6.4 per cent, over the RE at Rs 20.16 lakh crore. In FY20, GTR saw a rare decline — the collections in the year were Rs 20.04 lakh crore, compared with Rs 20.76 lakh crore in FY19.
FE has estimated net receipts (post-devolution) in FY21 at Rs 14.2 lakh crore, up 5.8 per cent over RE and 4.8 per cent higher than such receipts in FY20.
The year-on-year growth in tax collections in FY21 is a remarkable feat given the rarity of an economic contraction in the year (nominal GDP is seen to have shrunk 3.8 per cent in the year).
Of course, a large part of the growth in tax revenue is attributable to the steep hike in assorted taxes (excise/cess) on petrol and diesel, but improved buoyancy is visible across other taxes like GST, Customs and personal income tax. Excise revenue in FY21 was up a steep Rs 1.23 lakh crore over the Budget Estimate and nearly Rs 30,000 over RE. Even corporate tax revenue exceeded the RE level by Rs 11,000 crore.
As per a Finance Ministry statement Tuesday, “The provisional figures for indirect tax collections for the financial year 2020-21 show that (post-refunds, pre-devolution) revenue collections are at Rs 10.71 lakh crore as compared to Rs 9.54 lakh crore for the financial year 2019-20, thereby registering a growth of 12.3 per cent”.
The indirect tax (pre-devolution) break-up is as follows: Customs collections stood at Rs. 1.32 lakh crore in FY21 as against Rs.1.09 lakh crore in FY20, a growth of around 21 per cent. Central Excise stood at Rs. 3.91 lakh crore in FY21 as against Rs.2.45 lakh crore the previous fiscal, up a solid 59 per cent. GST collections (CGST+IGST+ Compensation Cess) during 2020-21 were Rs. 5.48 lakh crore, up 6 per cent over RE but 8 per cent lower than the collections in FY20.
The Centre collected Rs 9.45 lakh crore as direct taxes (post-refund, pre-devolution) in 2020-21, up Rs 40,000 crore or 4.4 per cent from the RE.