Direct Tax Collection Trends in FY 2024-25

The recent data released by the Central Board of Direct Taxes (CBDT) on November 10, 2024, presents a robust overview of India's direct tax collections for FY 2024-25. In this article the significant trends in corporate and non-corporate tax contributions have been analysed.

1. Overview of Gross Direct Tax Collections

As of November 10, 2024, the gross direct tax collections for FY 2024-25 reached ₹15,02,161 crore, reflecting a growth of 21.20% compared to ₹12,39,402 crore collected by the same date in FY 2023-24. This growth underscores strong economic activity and improved compliance driven by enhanced digital monitoring and reforms.

Breakdown of Gross Collections by Category

• Corporate Tax (CT): Corporate tax collection surged to ₹6,60,354 crore, up from ₹5,59,868 crore, representing an increase of 17.96%.
• Non-Corporate Tax (NCT): Non-corporate tax, which includes contributions from individuals, HUFs, firms, AoPs, and other entities, experienced a 22.00% increase, growing from ₹6,58,184 crore in the previous fiscal to ₹8,03,491 crore.
• Securities Transaction Tax (STT) and Other Taxes: STT and other minor taxes contributed to the growth with a combined increase, albeit their impact on overall gross collections is comparatively smaller.

2. Refunds and Their Impact

Refunds issued as of November 10, 2024, amounted to ₹2,91,531 crore, a substantial increase of 53.07% from ₹1,90,461 crore in FY 2023-24. This rise in refunds indicates faster processing of return and other refund claims..

3. Net Direct Tax Collections

After accounting for refunds, the net tax collections for FY 2024-25 stood at ₹12,10,630 crore, marking a 15.41% increase from ₹10,48,941 crore in FY 2023-24. This growth in net collections is a testament to the effectiveness of tax administration policies and compliance efforts.

Breakdown of Net Collections by Category

• Corporate Tax (CT): Net corporate tax collections reached ₹5,10,484 crore, showing consistent growth.
• Non-Corporate Tax (NCT): Net collections from non-corporate taxpayers, an essential component reflecting individual and smaller business compliance, rose significantly to ₹6,61,858 crore.

4. Drivers of Growth in Tax Collections

Several factors are likely driving the upward trajectory in tax collections:

• Economic Growth and Consumption Patterns: Higher corporate tax collection is indicative of strong corporate earnings and industrial growth. Enhanced digital tax administration and TDS  has likely encouraged both corporate and non-corporate sectors to fulfill tax obligations more rigorously.
• Wider Adoption of Digital Compliance Tools: Efforts like the e-verification scheme under Section 135A and the high-value transactions reported in AIS (Annual Information Statement)  have bolstered compliance, increasing the reach of direct tax collection.

Conclusion

The 21.20% growth in gross tax collections and the 15.41% rise in net tax collections for FY 2024-25 till 10/11/2024 underline a positive trajectory for India’s tax administration efforts. These results demonstrate the effectiveness of recent policy initiatives aimed at expanding the tax base and streamlining compliance. With continued economic growth and further digitization, India’s tax system is well-positioned to maintain its upward trajectory, supporting fiscal stability and development initiatives.

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