In a first in two decades, govt falls short of direct taxes target

This comes amid a sharp fall in economic growth and cut in corporate tax rates

Figures released by the Controller General of Accounts showed the fiscal deficit in eight months has gone much beyond the target.

It seems Indian economy’s rough patch is a long one. Reports quoting Reuters said India’s corporate and income tax collection for the current year is likely to fall for the first time in at least two decades. This comes amid a sharp fall in economic growth and cut in corporate tax rates.

The Union government’s direct tax target for the year ending March 31 is ₹13.5 lakh crore – a 17 per cent increase over the prior fiscal year.

Reports said a sharp decline in demand stung businesses, forcing companies to cut investment and jobs, denting tax collections and prompting the government to forecast 5 per cent growth for this fiscal year – the slowest in 11 years.

The Prime Minister had instructed the finance Ministry to set ‘realistic targets’ for tax collection in the upcoming budget so that the business community is not harassed and hassled. The inference is that a ‘pumped up’ target could lead to more raids and, therefore a non-conducive business environment.


This directive assumes significance as the tax department had managed to collect only ₹7.3 lakh crore as of January 23, more than 5.5 per cent below the amount collected at the same period last year, said a senior tax official.

After collecting taxes from companies in advance for the first three quarters, officials typically garner about 30-35 per cent of annual direct taxes in the final three months, data from the past three years shows.

But eight senior tax officials interviewed by Reuters said despite their best efforts, direct tax collections this financial year were likely to fall below the ₹11.5 lakh crore collected in 2018-19.

Forget the target. This will be the first time that we’ll see a fall in direct tax collection ever,” said a tax official in New Delhi, as quoted by NDTV.

He estimates that direct tax collections for this year could end up roughly 10 per cent below fiscal 2019.