Advance Tax collections up by 90% In Q3 of FY 2021-22

Advance tax receipts nearly doubled in the third quarter of the fiscal year compared to the same period the previous year, indicating that the economy is on the mend despite the threat posed by the Omicron Covid-19 version.

According to persons familiar with the preliminary figures, the advance tax collection in the December quarter was 94,107 crore, up 90 percent from 49,536 crore in the same period last year. The amount of corporate advance tax collected was 54,445 crore, up 75 percent from 31,107 crore the previous year. Personal income tax revenue increased by 115 percent to Rs. 39,662 crore.

“As information from banks is awaiting,” a government source told ET, “the indicated amount is expected to climb further.” On December 16, cumulative advance tax revenues for the fiscal year’s April-December period totaled 3.45 lakh crore, increasing 65.5 percent from 2.08 lakh crore the previous year. Corporation tax revenue totaled 2.50 lakh crore, up 55 percent from the previous year’s figure of 1.60 lakh crore. From 47,865 crore to 97,719 crore, personal income tax increased by 98 percent.

“In the first two quarters, several of the marquee corporations simply skipped the dividend or paid substantially less,” a government official said.

Gross Collections Have Increased by 50%

“However, most industries have had a solid third quarter so far, save a few like automobiles owing to the chip shortage, therefore collections have risen even more,” the official said.

According to the source, personal income tax receipts have been increasing since the beginning of the fiscal year.

This is primarily due to an increase in the pay of mid-level to senior management executives in industries like information technology and pharmaceuticals. He also mentioned that promoters of unicorns and other companies had a good year.

Advance tax is paid in four instalments as and when money is generated, rather than at the end of the fiscal year. It is regarded as a barometer of economic sentiment. The first instalment, or 15% of advance tax, is due by June 15, the second (30%) by September 15, the third (30%) by December 15, and the balance by March 15.

Direct tax revenue, net of refunds, increased 67.2 percent to $8.29 lakh crore from $4.95 lakh crore in the same period the previous year. Total refunds issued, on the other hand, decreased by 7.5 percent to Rs.1.35 lakh crore from Rs.1.46 lakh crore the previous year.

The total amount collected was 50 percent higher than the previous year, at 9.64 lakh crore. In FY21, gross collections totaled Rs.6.41 lakh crore. The current fiscal year’s aim is Rs. 11.08 lakh crore.

The Central Board of Direct Taxes (CBDT) announced on Thursday that the new e-filing system had received over 35.9 million income-tax filings. According to the IRS, the number of ITRs filed every day has surpassed 600,000 and is rising as the extended deadline of December 31 approaches.

Companies have been cautious about expectations over Covid fears, thus direct taxes may surpass budgeted forecasts for the fiscal year. With growing vaccine coverage and a subdued Omicron effect, this could alter.

Experts predict that the current fiscal year’s estimated tax collection target of 22.2 lakh crore, both direct and indirect, will be exceeded.

“The government’s kitty is expected to exceed budget predictions this financial year,” an analyst said, citing net direct tax collections of over Rs. 8 lakh crore as of mid-December and average monthly goods and services taxes (GST) collections of around Rs. 1.15 lakh crore.