The direct tax collection numbers released on Sunday are yet another indication of economic revival in the country. The direct tax collections for the FY 2022-23, as on September 17, 2022, show that net collections are at Rs. 7,00,669 crore, compared to Rs. 5,68,147 crore in the corresponding period of the preceding financial year, representing an increase of 23 per cent. Of this, the cumulative advance tax collections till date grew by 17 per cent indicating a better performance of businesses in the country.
This is the first time the direct tax collection has crossed the six-lakh figure. While it was Rs. 5,68,147 crore in the same period of fiscal 2021-22, R. 3,27,174 crore in the same period of 2020-21, Rs. 5.5 lakh crore in the same period of 2019-20 period stood at Rs. 5.5 lakh crore and Rs. 5.25 lakh crore in the April-September 2018-19.
If one correlates the growth in the size of the Indian economy and its corresponding direct collection by taking the pre-Covid fiscal of 2018-19 as the base year, one could find that the direct tax collection by September is in tune with the economic growth. India’s economy was $2.702 trillion in 2018 and grew by 30 per cent over the next five years to $3.535 trillion in 2022 — translating into an average annual growth of six per cent. Similarly, the direct tax collection grew by 33 per cent in 2022 at Rs. 7 lakh crore compared to Rs. 5.25 lakh crore in 2018.
The numbers hint that the economy has fully recovered from the Covid impact but the government should not become complacent because the real picture will emerge only when it finds out the inflation-adjusted growth rate. While the Centre has been taking many reform-oriented steps such as Gati Shakti and nudging state governments towards fiscal consolidation, India is still far away from achieving its real economic potential.