The Indian economy, already struggling massive slowdown, may face a significant setback in the coming times. India’s corporate and income tax collections for the current year are prone to fall for the first time in at least two decades. This fall is due to a sharp drop in economic growth and a cut in corporate tax rates, more than half a dozen senior tax officials reported this.
According to the report, up to January 23, the tax department has raised only Rs 7.3 lakh crore. If compared to the same period in the last financial year, the tax collection is 5.5% less. BJP government was targeting 13.5 trillion rupees ($ 189 billion) for direct tax collection for the year ended March 31, 17 percent more than in the previous fiscal.
Direct tax collection, which was estimated at around Rs 13.5 lakh crore, is a dream now. That is to say, the target of tax collection in the current financial year (1 April 2019 – 31 March 2020) is about Rs 6.2 lakh crore away. Share of direct tax collection is about 80 percent of the government’s annual revenue. The government may have to take a loan in the event of a decrease in revenue.
Today, Indian business has deteriorated because of a sharp drop in demand. Therefore companies have had to cut investments and jobs, which also results in a breach of tax collection. The government has to estimate a 5 percent growth rate in this financial year which, The lowest in 11 years.
This report has come at a time when the general budget is scheduled for 1 February.
Before the budget, there is constant lousy news on the economic front. Several major rating agencies, including IMF, World Bank, have lowered GDP growth estimates. At the same time, inflation has also increased. In such a situation, it is essential to see actions taken by the government during the general budget.