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Fall in direct tax collection on expected lines and due to tax reforms, says government

Fall in direct tax collection on expected lines and due to tax reforms, says government

Refuting media reports that the growth in direct tax collection for FY 2019-20 has fallen drastically, the Modi government today said that the fall in the collection of direct taxes is on expected lines and these reports are not true.
The Ministry of Finance in a statement said, “There are reports in a certain section of media that the growth of direct taxes collection for the FY 2019-20 has fallen drastically and buoyancy of the direct tax collection as compared to the GDP growth has reached negative. These reports do not portray the correct picture regarding the growth of direct taxes.”

It is a fact that the net direct tax collection for the FY 2019-20 was less than the net direct tax collection for the FY 2018-19. However, this fall in the collection of direct taxes is on expected lines and is temporary in nature due to the historic tax reforms undertaken and much higher refunds issued during the FY 2019-20.
“This fact becomes more apparent if we compare the gross collection (which removes anomalies created by the variation in the amount of refund given in a year) after taking into account the revenue foregone estimated for the bold tax reforms undertaken, which have a direct impact on the direct taxes collection for FY 2019-20.

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