MUMBAI: Reflecting the tepid recovery in the overall economy after lifting of national lockdowns, the pace of deceleration in tax collections has slowed down with total tax mop-up touching Rs 2,53,532.3 crore so far this fiscal, which though is still down 22.5 per cent from the year-ago period, according to an Income Tax Department source.
Economists described the numbers as in line with their expectations, saying the sequential improvement from the first quarter when the total tax mop-up had plunged 31 per cent was expected given the fragile momentum seen in the overall economy.
During the period ending September 15, 2019, total tax collection had stood at Rs 3,27,320.2 crore, the income tax source from the Mumbai zone said, adding the numbers are provisional as banks are yet to update the final figures.
However, the source refused to share the advance tax numbers separately for the current quarter, which had nosedived in the first quarter.
Similarly, the source also did not share total refunds this year, as well as the gross collections.
During the first quarter ending June, gross tax collections had fallen by a steeper 31 per cent to Rs 1,37,825 crore, driven down by a massive 76 per cent plunge in advance tax mop-up, as the country was on a full lockdown due to the pandemic.
“Of the total collection till September 15, when taxpayers, both individuals as well as companies, are supposed to pay advance tax for the quarter, personal income tax collection at the national level stood at Rs 1,47,004.6 crore and corporation tax mop-up at Rs 99,126.2 crore, totalling the two largest components of the tax kitty at Rs 2,46,130.8 crore,” the source told PTI on Wednesday.
The other two components of the tax revenue are the securities transaction tax which from Mumbai alone jumped to Rs 7,078.9 crore from Rs 5,035.3 crore a year ago and the equalisation levy which inched up from Rs 487 crore last year to Rs 504.4 crore this year, the source said.
When contacted Aditi Nayar, the chief economist at rating agency Icra, told PTI that tax revenue trends are in line with the trends in many other macro-indicators, and the slower pace of contraction will further narrow in Q2 relative to the previous quarter numbers.
“We expect GDP to contract by 11-13 per cent in real terms in the ongoing quarter. Subsequently, a favourable base effect related to the cut in corporate tax rates last September would result in a further optical catch up,” she said.
Echoing similar views, D K Pant, the chief economist at rival agency India Ratings, said the sequential improvement in tax mop-up is reflective of the overall pick-up in economic activities and are on expected lines.
“The pace of contraction in tax revenue collection will come down in the second quarter and will continue to improve even though we expect an 11.5 per cent contraction in GDP for the full fiscal.
“The tax numbers may correct a few percentage points more. But there is likely no surprises either way. For the full year, we see the numbers improving from -31 per cent in Q1 to -22.5 per cent in Q2 and further to -17-18 per cent in Q3, and the year closing with a gap of 12-15 per cent. It’s not going to be V-shaped recovery either on the revenue front or on the overall growth front,” Pant told PTI.
While total collection fell 22.5 per cent, led by a 13.9 per cent dip in collections from Mumbai, which is the largest tax base contributing to over a third of the national collections, and also the first city to be locked down due to the pandemic.
The megapolis still continues to be the most affected region by the pandemic.
Total collection from the nation’s financial capital fell to Rs 74,789.6 crore, lower by 13.9 per cent Y-o-Y, the source said, adding of the total mop-up from Mumbai, personal income stood at Rs 34,808.8 crore and corporate tax stood at Rs 32,921.2 crore.
Among other major tax collection zones, Bengaluru is only zone where tax revenue grew over Y-o-Y clipping at 9.9 per cent. The tech capital contributed Rs 40,665.3 crore to the national tax kitty, up from Rs 36,986 crore, while Kochi has reported the worst collection with a massive 49 per cent plunge at Rs 3,214.7 crore, according to the data.
The Delhi zone, the second largest tax zone, saw a full 33 per cent decline at Rs 33,176.7 crore from Rs 49,545.8 crore during the reporting period, while Chennai reported 37.3 per cent decline to Rs 15,580 crore. While Hyderabad was down 24.2 per cent at Rs 14,870.3 crore, from Pune it was down a full 30 per cent to Rs 14,031.3 crore and Kolkata saw the collections plunging 46.9 per cent to Rs 7,353.9 crore.