By Elton Gomes
The number of new income tax filers for 2017-18 increased by 26% to 6.84 crores, thus enabling the government to meet direct tax collections for the fiscal year, the Ministry of Finance announced in a statement on Monday.
Additionally, gross collections (before refunds) for the fiscal year were recorded to have increased by 13% to Rs 11.44 lakh crore. Net collections for Corporate Income Tax and Personal Income Tax also increased by about 17% and 19% respectively.
“The increase in total returns filed and new returns filed during FY 2017-18 is a result of sustained efforts made by the Income Tax Department in following up with potential non-filers through email, SMS, statutory notices, outreach programmes, etc. as well as through structural changes made in law and the Governments emphasis on widening of tax net,” the statement detailed.
Cause for increase
Tax experts claim that India saw a rise in income tax filers largely due to the efforts of tax officials before the Union Budget that was presented on February 1, 2018. Shefali Goradia, a partner at Deloitte India, said she thinks the Central Board of Direct Taxes stepped up its efforts to collect taxes in December, including pursuing tax arrears, which helped increase the tax base.
In 2016-17, due to demonetisation, the government managed to add roughly 9.1 million new taxpayers. This certainly led to an increase in revenue collection. Besides demonetisation, implementation of the GST (Goods and Services Tax) Bill led to an increase in indirect taxpayers by more than 50%. Approximately 34 lakh businesses became part of the taxpayer base, according to the Economic Survey written by Chief Economic Advisor Arvind Subramanian.
Impact on fiscal deficit
After the implementation of the GST Bill, the governments revenue was on the decline. The fiscal deficit target was hence revised from 3.2 to 3.5 percent. Although there were concerns of India overshooting its fiscal deficit target, officials have claimed that the fiscal deficit will be narrower than 3.5 percent.
Subhash Chandra Garg, secretary of the Department of Economic Affairs, confirmed in a tweet that fiscal deficit and revenue deficit are lower than the revised figures for 2017-18.
The increase in the number of taxpayers will help lower the burden on the governmental fiscal deficit that has been accumulated.