Better than expected revenue collection in the first two months of the current financial year gives a better manoeuvring room to the finance minister Nirmala Sitharaman.
She can not only sustain the capital expenditure spree of the government in the first full budget of the Prime Minister Narendra Modi's government's third term, but it also allows her to increase social sector spending. The maiden full budget is likely to be tabled after the commencement of Monsoon Session of the Parliament next month.
The latest official data released by the Controller General of Accounts (CGA) showed that in the first two months of the current financial year (April-May 2024), both the tax and non-tax revenue of the Union government performed better than the collections during the same period of the last fiscal.
The data showed that as against the budget estimate of over Rs 30 lakh crore of revenue receipts for the current financial year, a sum of over Rs 5.7 lakh crore was collected by the government. It is 19 percent of the budget estimate for the full financial year. It was just 15.7 percent during the corresponding period of the last fiscal.
While the tax authorities were able to collect 12.3 percent of the full year target, which is marginally higher than the tax revenue collected during the corresponding period of the last fiscal, the real growth has been registered in the non-tax revenue receipts of the Central government.
As against the budget estimate of around Rs 4 lakh crore, the government is able to collect nearly Rs 2.52 lakh crore in the first two months, which is 63 percent of the budget estimate. The collection on this account was just 44.6 percent during the first two months of the last financial year.
However, the bulk of money comes from tax-revenue as the government collected over Rs 3.19 lakh crore in the first two months as against the budget estimate of over Rs 26 lakh crore for the full financial year.
In February this year, the finance minister presented a Rs 47.65 lakh crore budget for FY 2024-25 which is an increase of over Rs 2.75 lakh crore over the previous year’s budget, which is an increase of over 6 percent.
The Union government’s budget has been expected to increase to a record Rs 48 lakh crore in the current financial year from Rs 42 lakh crore in FY 2022-23.
There are two main sources of such a massive budget, revenue receipts and borrowings. While revenue receipts for the current fiscal have been estimated at over Rs 30 lakh crore, the remaining amount of about Rs 17 lakh crore is being arranged by borrowing money.
The revenue receipts also have two main components, tax revenue of the centre (net to centre), which has been estimated at Rs 26 lakh crore for the current fiscal and Rs 4 lakh crore in non-tax revenue. While tax revenue includes income tax, corporate tax, Centre’s share in GST, and excise and customs duties collected by the Centre whereas non-tax revenue includes the Centre’s interest income, dividends, and the money collected from disinvestment in public sector undertakings and other such incomes.
Personal income tax has shown healthy growth in the first two months, but there was a dip in corporate tax collection during this period compared to the same period in the previous fiscal.
The Union government collected Rs 4.6 lakh crore as gross tax revenue during this period, as against Rs 3.97 lakh crore during the same period of the last financial year.
The biggest increase was registered in the personal income tax collection during this period, as it increased to Rs 1.8 lakh crore from Rs 1.27 lakh crore during the same period of last fiscal.
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