A whopping 303% jump! India's tax collection growth in last 12 years

The Central government’s tax revenue has witnessed a whopping 303 per cent jump in the last 12 years, from Rs 6.2 lakh crore in FY10 to Rs 25.2 crore (revised estimates) in FY22. This, while India’s GDP at the constant price has increased 93 per cent from Rs 76.5 lakh crore in FY10 to Rs 147.4 lakh crore in FY22. The government’s gross tax revenue to GDP ratio has improved to 17.1 per cent in FY22 from 8.2 per cent in FY10.

A major contributor to the government’s coffers is the Goods and service tax (GST) at Rs 6.75 lakh crore in FY22, which accounts for 26.8 per cent of the central government’s gross tax revenue of Rs 25.2 lakh crore in FY22. GST is followed by corporation tax at Rs 6.35 lakh crore, having a share of 25.2 per cent, and Rs 6.15 lakh crore under income tax with 24.4 per cent of the total contribution.

In the current financial year (FY23), the Central government has mopped up Rs 16.1 lakh crore as the cumulative gross tax revenue for the seven months from April to October 2022. This is 18 per cent higher than the gross tax revenue of Rs 13.6 lakh crore collected in the same period in the last financial year 2021-22. Also, this is more than 58 percent of budgeted estimates of Rs 27.6 lakh crore for the complete FY23. This surge in tax collection is majorly driven by a 28 per cent increase in the income tax and a 24 per cent rise in the corporate tax over the collections of the corresponding period last year.

Also, a report from Kotak Economic Research has forecast robust growth in government tax collection in 2023. 

“We pencil in gross tax revenues growth at 8 per cent (an upside of Rs 2.4 lakh crore over FY2023 Estimates) led by direct tax collections growth of 10 per cent and indirect tax collections growth of 5 per cent. We expect net tax revenues to see an upside of Rs1.7 lakh crore over FY2023 Estimates at Rs22.9 lakh crore. On the non-tax revenue front, RBI’s surplus transfer to the government will be a key source of income since earnings on foreign assets (including foreign exchange reserves “FX” sales) should be substantially larger than in FY2023E led by higher global rates and aggressive FX sales through FY2023. We pencil in divestments around similar levels as FY2023E," stated the report.

Also read: India's gross direct tax collections up by 26% to Rs 13.63 lakh cr for FY23

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