Interim Budget 2024: India's direct tax-GDP ratio hits 15-year high in FY23

India’s direct tax-to-GDP, which is the share of taxes in the overall output generated in the country, hit a 15-year high of 6.11 percent in 2022-23, time-series data released by the Central Board of Direct Taxes (CBDT) under the Ministry of Finance showed. 

There was also an increase in the income tax return filers in India to 7.4 crore in FY23, up 6.3 per cent from FY22, even as the tax buoyancy declined to 1.18 in 2022-23 from 2.52 in 2021-22 and 1.29 in the pre-Covid year of 2018-19.
 
The data showed the contribution of direct taxes – which majorly comprises corporate tax and personal income tax – to total tax collections reached pre-pandemic levels. In 2022-23, direct taxes made up 54.62 percent of the government’s total tax revenue, up from 52.27 percent in 2021-22 and 46.84 percent in 2020-21 – the lowest in 15 years.

Net direct tax collections, which reflect collections after refunds, “increased by 160.52 per cent to Rs 16.63 lakh crore in FY 2022-23 from Rs 6.39 lakh crore in FY 2013-14”, CBDT said in a statement. 

Other findings

-- Centre spent Rs 8,452 crore in collecting direct taxes in 2022-23, up from Rs 7,479 crore in 2021-22. Efficiency of tax collections improved, with the cost of collection decreasing to 0.51 percent of total collections in 2022-23 from 0.53 percent the year before that.

-- A total of 7.78 crore income tax returns were filed in 2022-23, up 6.5 percent from the number filed in 2021-22. Income tax returns filed by individuals make up the majority, with 2022-23 seeing 7.33 crore such returns being filed by this category.

Maharashtra accounted for 36.4 per cent (Rs 6.05 lakh crore) of the overall direct tax collections in the country in the financial year 2022-23, followed by Delhi at 13.3 per cent (Rs 2.22 lakh crore), Karnataka at 12.5 per cent (Rs 2.08 lakh crore) and Tamil Nadu at 6.4 per cent (Rs 1.07 lakh crore).