The finance minister appears to be bullish with the tax collection targets for next year despite a global economic slowdown. Jaitley has projected 12% growth in revenue collection next fiscal.
Finance Minister has reasons to be confident as the sharp decline in crude prices last year helped him marginally exceed revenue collection target this fiscal.
This is for the first time in last five years when the central government is set to exceed the revenue collection target by Rs. 10,121 crore. Gross revenue collection of central government is estimated at Rs. 14.59 lakh crore this year against the target of Rs. 14.49 lakh crore.
The government is set to collect Rs. 2.84 lakh crore in excise duties this year, an increase of almost 50% over the previous year’s amount. The major contribution came from excise duty hikes on petroleum products as the government upwardly revised it seven times in the last one year.
Jaitley has projected an increase of over Rs. 1.71 lakh crore in revenue collection in FY 2016-17 over the revised estimate for FY 2015-16 (RE). The gross revenue collection of the central government is pegged at Rs. 16.30 lakh crore next year.
In the revised estimates presented on Monday, the single biggest source of revenue for central government is corporate tax that is pegged at Rs. 4.52 lakh crore, almost one third of the gross revenue collection.
Corporate rate tax registered a growth of 5.6% or Rs. 24,045 crore over the actual collection of 2014-15 but still fell short by 3.75% or Rs. 17,658 crore from the budget estimate for the current fiscal.
Income tax collection registered the steepest fall from budget estimate this year. The government collected just Rs. 2.99 lakh crore against the target of Rs. 3.27 lakh crore, a shortfall of almost 9% or Rs. 28,316 crore.
Income Tax collection, however, registered a growth of over 12.53% or Rs. 33318 crore, over the income tax collection of 2014-15 that stands at over Rs. 2.65 crore.
But buoyancy in indirect tax collections, particularly in excise duty collection more than met the shortfall in direct tax collections this year.
All three major indirect taxes, customs, excise duty and service tax exceeded their budget estimates this year.
Custom duty collections fetched over Rs. 2.09 lakh crore to the government, marginally higher than the budget estimates.
Custom duty collections rose by more than 11% in comparison with the actual collections a year ago. Jaitley has set a target to increase the custom duty collections by 10% next year.
This year, the most noticable jump was recorded in excise duty collections. The government collected over Rs. 2.84 lakh crore against the target of Rs. 2.30 lakh crore, an increase of almost 24%. This is 50% jump over the actual excise duty collections during 2014-15.
Encouraged by the sharp decline in international crude prices, the finance minister has set a target to increase the excise duty collections by over 12% the next year.
Another major source of revenue for the government is service tax. The finance minister has maintained the service tax rate at 14% but imposed Krishi Kalyan Cess at the rate of 0.5% in addition to already applicable Swachch Bharat Cess of 0.5%.
According to the revised estimates, this year the government’s service tax collection is expected to be Rs. 2.1 lakh crore, only marginally higher than the budget estimates. However, it’s 25% more than the actual collection during the previous year.
Jaitley has set a target to increase the service tax collections by 10% in the next fiscal.