“We expect to exceed our initial estimates for tax receipts this year. The overall tax collections will be higher than expected because our estimates were conservative,” stated a senior finance ministry official. This optimism is based on the significant growth in income tax returns and improved compliance with Goods and Services Tax (GST). Despite global challenges, the economy is performing well.
Data from the finance ministry shows that direct tax collections during the fiscal year up to August 10 were 15.7% higher at over Rs 6.5 lakh crore. Net collections during the four months of the financial year were over Rs 5.8 lakh crore, which is 17.3% higher compared to the previous year and almost one-third of the annual target.
During the current financial year, the Centre is projected to have a net tax receipt increase of 11.7%. GST collections are expected to meet the target, although customs may face some pressure due to weak imports and lower commodity prices.
While disinvestment receipts are budgeted at Rs 51,000 crore, the government can expect substantial dividend payouts, with RBI announcing a Rs 87,416-crore payout, which is 1.8 times the budget receipts from the central bank, state-run banks, and financial institutions. With the strong performance of the banking sector, the financial picture is expected to improve. The pressure on spending is likely to come from higher-than-budgeted subsidies.