Despite 74% more direct tax collections, the government borrows 58% of its target.
Despite the fact that the Centre has collected 74% higher direct taxes on an annualised basis this fiscal year, at Rs 5.70 lakh crore, it has also borrowed a staggering 58 per cent of the budgeted amount by selling Rs 7.02 lakh crore worth of debt instruments in the market during the same period.
While it mopped up Rs 31,000 crore in long-term and short-term debt at an average price of 6.15 per cent at the weekly auction of government securities earlier in the day on Friday, the revenue department said later in the day that net personal income tax and corporate tax collection jumped a full 74% to Rs 5.70 lakh crore so far this fiscal, driven primarily by advance tax and TDS payments.
The Central Board of Direct Taxes stated in a statement that the mop-up of net direct tax (after deducting refunds from gross collection) between April 1 and September 22 was Rs 5,70,568 crore, up 74.4 per cent from Rs 3.27 lakh crore collected in the same time last year.
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Furthermore, the net collection is 27% higher than the Rs 4.48 lakh crore it received in FY20, which was prior to the pandemic.
Furthermore, it has been collecting record amounts of indirect taxes in the form of GST (which has been exceeding Rs 1 lakh crore almost every month) and record duties on petroleum products, totaling Rs 94,181 crore in the first quarter on the back of a record tax on fuel that generated an 88 percent increase in revenue over the previous financial year.
According to Care Ratings, the government borrowed Rs 31,000 crore in today’s weekly auction by selling 5, 13, 14, and 30-year securities.
With this, the overall market borrowings so far this fiscal are Rs 7.02 lakh crore, down 8% from previous fiscal’s total of Rs 7.66 lakh crore at this time, and Rs 12,652 crore less than the auctions’ total disclosed amount.
To put it another way, the debt raised so far in FY22 accounts for 58% of the overall projected borrowing limit of Rs 12.05 lakh crore for the fiscal year, and 52% if the GST compensation to states of Rs 1.58 lakh crore is added to the borrowing limit for the year, according to the study.
According to the agency’s chief economist Madan Sabnavis, the weighted average yield across tenures fell 4 basis points to 6.15 per cent last week and is now 31 basis points lower than the peak reached in early August when it soared to 6.46 per cent on August 6.
The Finance Ministry will begin the budgetary process on October 12th.
It should be noted that the government has been collecting Rs 32.90 in excise duty on every litre of petrol (which has been selling for over Rs 100 a litre for months) and Rs 31.80 on a litre of diesel since April last year and had collected a whopping Rs 3.35 lakh crore in FY21 when the total excise mop-up was only Rs 3.89 lakh crore, up from Rs 1.78 lakh crore in FY20. Excise duty on fuel and gasoline was Rs 2.13 lakh crore in FY19.
The CBDT reported that gross direct tax collection so far this fiscal year has surpassed Rs 6.45 lakh crore, up 47 per cent from Rs 4.39 lakh crore in the same period last year and 16.75 per cent more than Rs 5.53 lakh crore in FY20.
Advance tax and tax deducted at source account for Rs 2.53 lakh crore of the entire mop-up. The mop-up was 74% higher than previous year’s levels, with self-assessment tax worth Rs 41,739 crore, regular assessment tax worth Rs 25,558 crore, dividend distribution tax worth Rs 4,406 crore, and tax under other minor areas around Rs 1,383 crore.
This fiscal’s advance tax collection is Rs 2,53,353 crore, up 56% from Rs 1,62,037 crore a year before. Corporation tax of Rs 1.96 lakh crore and personal income tax of Rs 56,389 crore have been collected in advance.