India’s direct taxes have experienced a notable and consistent growth trajectory over time. As of March 17, 2024, the Gross Direct tax collection for the fiscal year 2023-24 recorded an impressive increase of 18.7% compared to the corresponding period in the previous year (2022-23). The total collection before adjusting for refunds stands at Rs. 22.2 lakh crore, reflecting a significant rise from Rs. 18.7 lakh crore in the preceding financial year.
Direct taxes, which include income tax, corporate tax, capital gains tax, and property tax, are levied on taxable income earned by individuals and corporate entities. The responsibility for paying these taxes lies with the taxpayers themselves.
This surge in direct tax revenue can be attributed to initiatives such as demonetization (2016), the Income disclosure scheme (2016), and the e-verification scheme (2021), which have contributed to broadening the tax base. Additionally, the digitalization of tax processes has reduced collection costs and facilitated prompt and efficient tax refunds for small and medium taxpayers, thereby enhancing compliance.
Similarly, India’s indirect tax collections, particularly the Gross Goods and Services Tax (GST) revenue, demonstrate resilient and robust growth. The GST revenue for February 2024 reached Rs. 1.68 lakh crore, marking a substantial 12.5% increase compared to the corresponding month in 2023. This upward trend in GST collections underscores India’s strong recovery post-pandemic, reflecting a 59% acceleration from Rs. 11.3 lakh crore in FY 2020-21 to Rs. 18 lakh crore in FY 2022-23.
Indirect taxes, imposed on the sale and provision of goods and services, are collected and remitted by sellers rather than taxpayers directly. The average monthly gross GST collections for the fiscal year 2023-24 exceeded the previous year’s corresponding period, signaling steady growth in revenue collection.
India’s tax growth aligns with the expansion of its economy, which has witnessed significant momentum in economic and business activity in the post-COVID years. With a projected GDP growth rate of 9.1% in 2021–22, 7.2% in 2022–23, and 7.6% in 2023–24, India aims to become a USD 4 trillion economy by FY 2024-25, USD 5 trillion by FY 2026–27, and a USD 7 trillion economy by 2030, eventually reaching USD 30 trillion by 2047.
The rise in per capita monthly consumption spending and the reduction in inequality further illustrate India’s economic progress. As the country continues its journey towards global prominence, the expanding tax base serves as a testament to its resilience and potential. With prudent reforms and sustained momentum, India is poised to solidify its position as a key player in the global economy, epitomizing the spirit of “Viksit Bharat” as it advances towards a prosperous future.
