As of September 16, the central government’s anticipated tax revenues recorded a remarkable 24 percent increase compared to the same period last year. This rise is in stark contrast to the modest growth of 14 percent seen in the first quarter of this fiscal year, as reported by official sources. The 24 percent growth actually marks a turning point in the government’s fiscal outlook.
What makes this figure particularly crucial is the context it provides. In the first months of the fiscal year, the government was grappling with just a 14 percent increase in tax revenue, raising concerns about meeting budget targets. To put that in perspective, overall gross tax revenues from April to August grew only a meager 2.6 percent, significantly below the expected growth rate of around 10.4 percent.
This slow growth in overall tax revenues between April and August set off alarm bells, leading to speculation about possible downward revisions to growth estimates. Many people wonder whether the government will be able to meet its budgetary commitments, particularly in terms of direct taxes.
However, recent data offers a glimmer of hope. In September, tax revenues were up 23 percent, for a total of 8.64 trillion. Importantly, this figure represents net tax collection, and analysts are eagerly awaiting the release of gross tax revenue figures to assess the full picture. Nonetheless, this substantial increase significantly alleviates concerns that the government will fail to meet its budget estimates.
It is worth mentioning that these figures do not take into account income tax revenues, which present a mixed picture. In July 2023, income tax revenues were lower than in the previous year. Although this introduces an element of caution, the overall positive trend in early tax collections and the government’s efforts to stimulate economic growth offer a more optimistic outlook for fiscal stability.
(Edited by : CH Unnikrishnan)
First publication: September 21, 2023 11:17 a.m. STI