Tax collection trend showing signs of pick up, economy on recovery path: Finance Secy
New Delhi: In signs of the economy continuing to reflate, the government’s tax collections have picked up and high-frequency activity indicators continue to improve on the back of the government’s targeted COVID-19 stimulus, Finance Secretary Ajay Bhushan Pandey said.
In an interview with PTI, Pandey said the generation of e-way bills, needed for transportation of goods, is back to pre-Covid levels and online payments have risen exponentially.
Collection of Goods and Services Tax (GST), levied when a product is consumed or a service is rendered, has risen for the second month in a row.
“The (tax collection) trend shows that it did decline for the past few months, but it is not only on the path of recovery but is also picking up. In the month of September, GST collection was 4 per cent higher than what was there in the corresponding period last year,” Pandey said.
“In the month of October, it has risen by 10 per cent year-on-year with a collection of above Rs 1.05 lakh crore,” he added.
Pandey said the generation of e-way bills, which is mandatory for transporting goods worth over Rs 50,000, has gone up 21 per cent in October, while the number of e-invoice generation has touched 29 lakh IRNs (Invoice Reference Numbers) a day.
“E-way bill and e-invoice coupled with better GST collections show that the economy was not only on path of recovery but also returning to the growth path and picking up steadily,” Pandey, who is also the Revenue Secretary, said.
The gross direct tax collection in April-October period of the current fiscal stood at Rs 4.95 lakh crore, down 22 per cent over the same period last fiscal.
While corporate tax collection fell 26 per cent to Rs 2.65 lakh crore, personal income tax collection was 16 per cent lower at Rs 2.34 lakh crore.
GST collection in April-October period of the current fiscal stood at Rs 5.59 lakh crore, 20 per cent lower than the collection in the same period last fiscal.
Notwithstanding the dip in revenues, the government has issued Rs 1.27 lakh crore worth of income tax refunds and Rs 70,000 crore GST refunds so far this fiscal.
“In last 7 months, a total Rs 2 lakh crore refund was issued. This was during the time when our collection was less,” Pandey said.
He said the focus on faceless assessment, third-party information gathering and sharing of data between various agencies has helped improve tax collection by making it difficult for people to evade taxes.
“So the tendency to take advantage of the information asymmetry and take risk of tax evasion would be much much lower,” he said.
Pandey said the department is collecting third-party information like taxpayer’s consumption pattern, bank statement, mutual fund and share transaction, property transaction, import, export and foreign remittances.
“The economic impact of pandemic would have been much more if our tax collection system had not improved. During the last year, we have taken measures like faceless assessment, faceless appeal, SFT (statement of financial transactions), restriction on cash withdrawal by imposing TDS (tax deducted at source).
“So the unscrupulous people who were evading taxes, now it has become harder for them. These would incentivise people to furnish correct tax information,” he said.
The system analyzes the information asymmetry and issues red flags. So the risk premium is very high on tax evasion. We are sure that now the tendency to take risk of under-disclosure or non-disclosure of income would be much lower, Pandey added.
On economic stimulus package, he said the government’s intervention in the form of stimulus has addressed the need of most deserving section of economy and society.
“We are continuously monitoring the ground situation and the government will come out with whatever measures needed. We have come out with assistance relating to cash, food, and have provided liquidity to MSMEs and issued tax refunds, deferred tax payments, etc,” he said.
To promote domestic manufacturing in electronics, mobile, pharma and medical devices, the government is giving production linked incentives, Pandey said.
“Stimulus is not a one-time affair; it’s not that one size fits all. It’s time-to-time interventions with apt measures,” he added.
The government had in May announced a Rs 20 lakh crore ‘Aatmanirbhar Bharat’ stimulus package to boost the economy.
Last month, a Rs 73,000 crore package, including advance payment of a part of wages to central government employees and cash in lieu of leave travel concession (LTC), was announced to stimulate consumer demand and investment in the economy damaged by the coronavirus pandemic.