News

FY20 direct tax buoyancy at 1.12, tax efforts yielding results: CBDT

FY20 direct tax buoyancy at 1.12, tax efforts yielding results: CBDT

The direct tax buoyancy — a ratio of tax collection growth to nominal GDP growth — would stand at 1.12 for FY20 if revenue forgone due to corporate tax cuts is taken into account, the Central Board of Direct Taxes (CBDT) said. The government’s argument is that formalisation of the economy, aided by the GST and demonetization, has had a positive bearing on the tax buoyancy, even when the economy is witnessing growth pangs.
Of course, FY20 buoyancy was still lower than 1.21 achieved in FY19. Tax buoyancy is a measure of efficiency of tax mobilisation or ‘tax effort’, and if it is greater than 1, it indicates collections are rising faster than the GDP.

The gross direct tax collection (without deducting refunds) was Rs 12.34 lakh crore in FY20, lower than Rs 12.98 lakh crore in FY19.
The corporate tax cuts announced in September lowered collection by an estimated Rs 1.45 lakh crore. Additionally, in the Budget last year, income of up to Rs 5 lakh was exempted from tax, impacting collection by about Rs 23,000 crore, the CBDT said.

Top