The year 2023-24 not only witnessed multi-year high tax buoyancy levels – mainly on the direct taxes front – but also higher level of compliance from taxpayers, and strict enforcement measures against tax evaders. Total tax receipts (before devolution to states) of the Centre in FY24 “slightly exceeded” the revised estimate (RE) of Rs 34.37 trillion in the year, an official source told FE on condition of anonymity, even as the figures are being computed.   

As per data on the Controller General of Accounts, in April-February FY24, the Centre’s gross tax revenue had stood at Rs 28.9 trillion, accounting for 84% of the RE of Rs 34.4 trillion. The March advance tax mo-up was robust on the direct tax front, and the GST receipts have surpassed expectations.

In the first eleven months of FY24, the Centre recorded a tax buoyancy of 1.5, substantially higher than 0.9 recorded in FY23, and it seems the full year’s tax buoyancy projection of 1.4 will be more than met.

The buoyancy of a tax system is a statistical measure that assesses how tax revenue responds to changes in the GDP and the intentional modifications made to tax policies over time. It is the percentage change in revenue associated with a one percent increase in GDP growth in nominal terms.

FY24 particularly witnessed a record-high growth in personal-income tax (PIT) collections, which was largely a consequence of higher compliance from taxpayers. In a post-Budget interview with FE, revenue secretary Sanjay Malhotra had said: “A lot of it (buoyancy) has to do with the use of technology, simplification of taxes and procedures, improved taxpayer services. Introduction of AIS (annual information statement), third party data, updated returns, etc have helped (in increasing compliance).” In April-February FY24, the PIT collections grew 25.8%.

Corporate tax collections also in the first eleven months rose 17.3%, which is much higher than 11.7% pegged in the RE of FY24. The Centre’s advance tax collections for FY 24, as on March 17, stood at Rs 9.11 trillion, which was 22.31% up on year. Despite higher refunds – amounting to Rs 3.36 trillion – issued this year, the direct tax receipts likely exceeded the RE. Refunds issued upto March 17 of FY24 were up 12.7% year-on-year.

On the indirect tax front, the Centre undertook several measures to curb tax evasion and broaden the taxbase, which helped towards higher Goods and Services Tax (GST) collections. The gross GST collections in FY24 came in at Rs 20.18 trillion, up 11.7% from FY23. The GST collections averaged Rs 1.68 trillion on a monthly basis, as against Rs 1.5 trillion average in FY23.

The Centre Board of Indirect Taxes and Customs (CBIC) started a focused drive in May 2023 on the issue of bogus registrations and issuance of fake invoices without any underlying supply of GST. The drive so far has helped detect a total of 29,273 bogus firms involved in suspected Input Tax Credit (ITC) evasion of Rs 44,015 crore. This has saved Rs 4,646 crore for the Centre. The CBIC is working towards enhancing the scale and scope of the drive in FY25.

Moreover, recoveries from show cause notices issued to several companies, such as online gaming, insurance, real-estate etc also added to the Centre’s kitty in FY24. Gunjan Prabhakaran, partner, BDO India said: “Among other reasons, FY24 GST collections also rose due to demands arising from litigations, since the due dates for issuance of show cause notices for FY18 and FY19 was in FY24, and many taxpayers had paid off the tax demands arising as per the notices.”

Vivek Baj, Partner at Economic Laws Practice said that substantial collections have also been made in Union excise duties and custom duties. “This shows that the tax departments have been very vigilant in ensuring reduction in the number of tax evasion cases and in maximizing collection of taxes.” In April-December FY24, collections from Customs duty stood at Rs 1.96 trillion, accounting for 89% of the RE; and excise duty mop-up stood at Rs 2.54 trillion, which is 84% of the RE.