FY19 direct tax collections may fall short of Rs 12 lakh crore target

The Centre is unlikely to meet its direct tax collection target of Rs 12 lakh crore for 2018-19, a senior finance ministry official, who did not want to be identified, told Moneycontrol.

“It will be a struggle to meet the initial estimate of Rs 11.5 lakh crore. But, we might just somehow be able to meet it. However, it may not be possible to meet Rs 12 lakh crore target,” the official said.

The government was expecting that a higher-than-estimated direct tax mop up will offset the shortfall in its indirect tax collections.

It now appears that both indirect as well as direct tax collections may fall short of the government’s revised estimates.

Lower than estimated tax collections may also throw up questions on the government’s ability to achieve the revised fiscal deficit target of 3.4 percent of GDP.

“To meet the direct target of Rs 11.5 lakh crore, the collection rate has to be at around 14.8 percent. Currently, it is lesser than that. To meet a target of Rs 12 lakh crore, the collection rate has to grow at almost 20 percent by the end of March which looks difficult,” the official said.

The government had earlier estimated the mop-up from direct tax collection at Rs 11.5 lakh crore, which was revised upwards by Rs 50,000 crore in the interim Budget for 2019-20.

“On direct taxes, we are reasonably confident of (meeting the target). But on the indirect tax front, there may be some shortfall,” Economic Affairs Secretary Subhash Chandra Garg said last week.

The Goods and Services Tax (GST) collection estimates for 2018-19 have been revised to Rs 6.43 lakh crore from Rs 7.43 lakh crore budgeted earlier.