New Delhi: Following slow growth in tax collections in the financial year 2019-20, the income tax department will ask for a cut of at least Rs 1 trillion in the direct tax collection target, the Business Standard reported.
Government officials said the Modi government’s decision to announce a steep cut in corporation tax rates that was applicable from 1 April this year, combined with slow economic growth has affected the tax collection.
“We are expecting a cut of at least Rs 1 trillion in the Budget target for direct tax collection to bring it closer to the ground realities. Economic slowdown has severely affected our mop-up, and corporation tax cuts have made the target further unrealistic,” the Business Standard report said quoting a government official.
The official further clarified that the positive results of the corporation tax cuts will only be seen in the medium term (5-7 years from when the tax cut was implemented).
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Falling tax collections
Tax collections, direct or indirect, have been low in FY 2019-20. Direct tax collections in the first seven months of the financial year grew at around 5 per cent against the estimated 17 per cent whereas GST collections grew around 12 per cent against the estimated 15 per cent.
The government set a tax collection target of Rs 13.80 lakh crore during the interim budget in February, which was revised to Rs 13.35 lakh crore during the Budget presented in July. Corporate tax collection went up by 0.5 per cent against the targeted 15.4 per cent of Rs 5.69 trillion.
Meanwhile, tax officers say they are confused by the government’s outreach. In her address to tax officers in Pune last month, Finance Minister Nirmala Sitharaman told officials to go easy on tax collection and at the same time said that the tax collection target this year was easy to achieve.
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Please use single unit in future. Either Trillion or Crores.
Could you please keep the units of measurements consistent in the article? Lakh crore / trillion rupees…
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