India’s tax revenues witnessed a jump of 34% in FY 2021-22 as compared to the previous year. At Rs 27 Lakh crore this is a record tax collection in a post-pandemic economy, said the Ministry of Finance in a statement.
This figure is almost Rs. 5 lakh crore above the estimates of the Union Budget 2021-22, which stood at Rs. 22.17 lakh crore. This marks a growth of 34% over last year’s revenue collection of Rs. 20.27 lakh crore, led by growth of 49% in direct taxes and supported by 20% growth in indirect taxes.
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“As a remarkable testimony to the rapid recovery of the Indian economy following successive waves of COVID-19, India reported revenue collections of Rs. 27.07 lakh crore (as per the pre-actual figures) in the financial year 2021-22. This figure is almost Rs. 5 lakh crore above the estimates of the Union Budget 2021-22, “said the Ministry in a statement.
Source: Ministry of Finance
As per the ministry, the major factors which gave a boost to India’s revenue collection in FY 2021-22 were due to slew of measures taken by the Prime Minister Narendra Modi led government, such as ease of filing ITR, faceless e-assessment, new AIS & GST reforms boosting compliance & fuel tax Collection.
There was a decrease in tax collection in 2019-20 and 2020-21 due to the disruption in economic activity in wake of COVID, but the rise in tax collection in the financial year 2021-22 is evidence of a sharp rebound and an economy that is back on track.
The surge in tax revenues has lifted India’s tax-GDP ratio for the year 2021-22 to 11.7%. This includes a direct tax to GDP ratio at 6.1% and indirect tax to GDP ratio at 5.6%.
This significant revenue growth has been propelled by robust economic recovery following the onslaught of the global pandemic, supported by one of the largest immunization programs of the world run by the Government. This was also supplemented with better compliance efforts in taxation.