Reforms undertaken by the Government within the Income Tax department and the “strengthening” of the Indian economy are among the major factors that led to the highest-ever direct tax collections in the country, which stand at over ₹13.63 lakh crore, CBDT Chairman J.B. Mohapatra has said.

He said apprehensions about the State of the economy, battered by the COVID-19 spread, were belied as it “did so well and the corporates came out so well [in paying taxes]” during the current financial year 2021-22.

Mr. Mohapatra exuded confidence that the direct tax mop up, which primarily includes personal income tax and corporation tax revenue receipts, will continue its present streak and the department will be able to successfully chase the target of collecting ₹14.20 lakh crore in taxes in the next fiscal.

“It will be very difficult to say how things will pan out the next year but there is no room to say that good times only last for four quarters,” Mr. Mohapatra told PTI in an interview.

The Central Board of Direct Taxes (CBDT) is the administrative body for the I-T department and according to its March 17 announcement, direct tax collections (as on March 16) in India broke all previous records.

The CBDT chief listed the reasons that he believes led to the record collections.

“First is the strengthening of the Indian economy. The better the economy, the better is the tax mop up, which is happening right now.” “Second reason will be the reforms undertaken across departments having an effect on the tax department’s own collection numbers,” he said.

There are policy measures that have been taken over a period of time, in the budget or outside the budget, and are now giving the “rebound effect” or dividends, Mr. Mohapatra said.

“The third reason, I would say, will be the reforms within the department… which have been continuous in the last four years.

“Probably, we have changed more than ever in the history of this department and these reforms take a while to gather steam and create results,” he said.

Mr. Mohapatra said after three-four years of working on the reforms, both the taxpayer and the department are getting acquainted with the new processes and procedures and they are “slowly bearing fruit”. “So, the point is that the reforms, once triggered, do not yield result right away but it takes time to sink in the mind, consciousness and also in the operational culture of the department. So, now probably the time has come in which we are seeing the results of the reforms in the department,” he said.

The fourth factor, Mr. Mohapatra said, was “small but important” and is related to the technology induction in the I-T department.

“For example, the annual information system [AIS] in which more and more information about the financial transactions they would have done in the year is now being delivered to the taxpayer. This is taking them towards voluntary compliance.

“Out of the over ₹13.63 lakh crore collection [as on March 16], only about ₹54,000-55,000 crore has come from regular assessment tax [under which tax is paid by the assessee after department issues notice to them].

“The rest of the collection is coming by way of voluntary compliance. This is happening because taxpayers are getting empowered with the financial information which is available to them,” he said.

Earlier, taxpayers used to “struggle” to get this information but now they have it at their fingertips, the CBDT chief said.
“So, this has also helped the taxpayer to pay the right amount of taxes,” he said.

Mr. Mohapatra said that by the end of this fiscal on March 31, the net or actual tax collections, after issuance of due refunds, should settle “upwards of ₹13.5 lakh crore.” The I-T department was given a target to collect ₹11.08 lakh crore (budget estimates) this fiscal and it was later revised to ₹12.50 lakh crore.
Mr. Mohapatra said collections under all heads have been the highest this time. He gave a breakup to substantiate his point.

This year till March 16, the collection under the advance tax category was ₹6.62 lakh crore, which is 40.7% more than 2020-21, 50.6% more than 2019-20 and 30.8% more than 2018-19, he said.

Similarly, the collection under the tax deducted at source (TDS) category stands at ₹6.79 lakh crore, which is 37.7% more than 2020-21, 40.5% more than 2019-20 and 51.9% more than 2018-19, he added.

The collection under the self assessment tax (SAT) category, Mr. Mohapatra said, stands at ₹1,34,318 crore, which is 34.9% higher than 2020-21, 36.1% higher than 2019-20, and 42.9% more than 2018-19.

Under the regular tax category, he said, the collection is ₹55,238 crore — 46.5% more than 2020-21 and 8.9% more than 2019-20.

For STT (securities transaction tax for shares) category, the government had set a target of ₹12,500 crore at the beginning of the year and in the revised estimates, it was hiked to ₹20,000 crore, the CBDT chief said.

“We are more than ₹22,000 crore (by March 16). So, all components, sub-components, gross and net numbers are the highest thus far in the history of the department.

“These are very big numbers and this has come at the most opportune time in the history of the department,” he said.

Mr. Mohapatra said the department has not completed a “sectoral analysis” yet to be able to say how various sections of the economy fared.

“Sectors which did well will be those that are doing well in the current time like banking. However, we are yet to complete the sectoral analysis. I will come back later to say which sectors have done well and which have not done well,” he said.