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Growth Trajectory of Direct Tax Collection Recent Direct Tax Reforms There are reports in a certain section of media that the growth of direct taxes collection for the FY 2019-20 has fallen drastically and buoyancy of the direct tax collection as compared to the GDP growth has reached negative. These reports do not portray the correct picture regarding the growth of direct taxes. It is a fact that the net direct tax collection for the FY 2019-20 was less than the net direct tax collection fo
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FAQ :
The net direct tax collection was lower in FY 19-20 primarily due to historic tax reforms undertaken and a significant increase in the amount of tax refunds issued during that financial year.
Key reforms included a reduction in corporate tax rates for existing domestic companies to 22%, a lower rate of 15% for new manufacturing domestic companies, and an increase in the standard deduction for salaried taxpayers to £50,000.
The total refunds issued in FY 19-20 amounted to £1.84 lakh crore, which was a 14% increase compared to the £1.61 lakh crore issued in FY 18-19.
The estimated revenue foregone due to these reforms was £1.45 lakh crore for Corporate Tax and £23,200 crore for Personal Income Tax (PIT).
The tax reforms were announced in September 2019, and their results are expected to become visible in the coming months and years, although the COVID-19 outbreak may cause delays.
The government has introduced measures such as faceless e-assessment and appeals, pre-filled income tax returns, abolition of Dividend Distribution Tax, and the 'Vivad se Vishwas' scheme to resolve pending tax disputes.
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