Advance tax collection plunged to decades low on a year-on-year basis in the first quarter of the current financial year, the steepest fall ever. The collection recorded a 76 percent drop and the Mumbai circle’s collection fell by 78 percent.
According to sources, gross collection of income tax, however, is down by 31 percent year on year.
An official source privy to the matter told Moneycontrol: “In this quarter, we were expecting a significant downfall due to COVID-19. Our offices were not functioning at full strength. Moreover, companies are also expecting less income in the next one year as sales have come down substantially. This year will be difficult for everybody. The reduction in corporate tax also impacted the overall collection.”
Advance tax is paid by corporates and individuals on the basis of anticipation of earning for the rest of the year. Less advance tax numbers denote gloomy economic outlook.
As per a report prepared by the income tax department, overall advance tax collection stands at Rs 11,714 crore as on June 15, which is 76 percent lower as compared to last year’s Rs 48,917 crore. Corporate tax stands at Rs 8,286 crore, which is lower by 79 percent on a year-on-year basis. Advance income tax collection also dipped by 64 percent to Rs 3,428 crore, against last year’s Rs 9512 crore.
The Mumbai circle, which contributes around 35 percent of the total tax collection, has also recorded a significant drop in the collection. Advance tax collection is down by 78 percent YOY at Rs 3751 crore. The tax department collected Rs 17,174 crore last year, in which Rs 14,873 crore came from corporate advances. This year, the collection is 80 percent lower at Rs 2859 crore. Advance income tax collection also dipped by 61 percent to Rs 892 crore, compared to the same quarter last year.
Gross collection of tax fell by 31 percent in this quarter to Rs 1,37,825 crore, as compared to Rs 1,99,755 crore in the same quarter last year. Gross collection of corporate tax stands at Rs 61,816 crore, which is 40 percent lower than last year. On the other hand, the gross collection of income tax also fell by 22 percent to Rs 73,280 crore.
Gross collection is calculated before deducting the refund amount. Income tax refunds also dipped by 28 percent to Rs 45,143.
In the Mumbai circle, gross collection of corporate tax fell by 41.2 percent to Rs 19,196 crore and income tax collection dropped by 31.6 percent to Rs 17,302 crore.
However, securities transaction tax (STT) collection has gone up by 13.6 percent year on year. The department has collected Rs 2,568 crore STT as compared to Rs 2262 crore in the previous year.
The income tax department’s assessment process has helped increase the overall tax collection. Regular assessment tax, calculated by the department separately when it feels that the taxpayer does not file proper tax as per income, has increased by 9 percent to Rs 7,724 crore.
Dividend distribution tax (DDT) revenue also fell significantly, down by 75 percent on a year-on-year basis. Last year, in the same quarter, the department collected Rs 4093 crore, which has come down to Rs 1,023 crore. In the Mumbai circle, DDT has come down by 84.8 percent to Rs 299 crore.
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