Revenue Secretary Bajaj warns FY23 tax collection growth may not be as robust as in FY22

Revenue Secretary Tarun Bajaj on April 8 warned that FY23 was unlikely to see a rate of growth in tax collections similar to that in FY22.

"To expect a similar growth in the next year (FY23) would not be giving you the correct picture," Bajaj told reporters at a briefing on April 8.

The revenue secretary added that the finance ministry would get a better picture of the situation once the first installment of advance tax collections was received in mid-June.

While the growth in tax collections in FY22 was aided by a favourable base effect, data released by Bajaj at the briefing showed the central government collected Rs 27.07 lakh crore as tax revenue in FY22 as per tentative estimates is 7.6 percent higher than the revised estimate of Rs 25.16 lakh crore, which was presented in the 2022 Budget on February 1.

Compared to FY21, 33.5 percent more tax was collected in FY22.

Complete data on the government's finances for FY22 will be released on May 31.

The amount of tax collected by the Centre in FY22 has been so much that it nearly matched the estimate for FY23, pegged at Rs 27.58 lakh crore, with Bajaj mentioning the number for FY22 may rise as it was tentative and could see "some upside".

However, for FY23, the secretary cautioned on two fronts: excise and customs.

"My own analysis is that while direct taxes are secular in growth...with indirect taxes, single items can have a major impact, for example the excise duties, which has brought us a lot of revenue. But we have sacrificed the excise duty. Similarly, for customs," Bajaj said.

The government collected Rs 3.91 lakh crore from excise duty and Rs 2.00 lakh crore from customs in FY22. While the former was marginally lower than the revised estimate of Rs 3.94 lakh crore, customs duty collections exceeded the revised estimate of Rs 1.89 lakh crore.

For FY23, the 2022 Budget has pegged excise and customs duty collections at Rs 3.35 lakh crore and Rs 2.13 lakh crore, respectively. However, pressure is rising on the government to effect another excise duty cut for petrol and diesel to rein in the runaway fuel prices and ease the burden on consumers. Customs duty on edible oils have also been cut to help contain inflation.

Bajaj refused to be drawn into discussions over whether the government could cut the excise duty given the comfort on tax collections.