Indirect tax receipts to exceed budget estimate by Rs 50,000 crore
November 5, 2022
The government is banking on extra tax revenues to fund additional subsidy expenditures to the tune of about Rs 2.8 trillion over the budgeted level.
The Centre’s indirect tax revenues – before devolution to states– may exceed the budget estimate (BE) for the current fiscal by around Rs 50,000 crore, as higher goods and services tax (GST) revenues will more than offset a shortfall in excise revenues, sources told FE.
While Central GST collections could exceed the budget target for FY23 by about Rs 1 trillion, excise duty collections may fall short of the Budget estimate (BE) by Rs 40,000-50,000 crore.
“The excise shortfall could be much less than Rs 85,000 crore estimated after the duty cuts for petrol and diesel announced in May. This is because additional revenues are expected from windfall taxes on petroleum products as well as from an increase in domestic diesel sales (about 5% on year increase so far),” a senior official told FE.
The indirect tax receipts in April-October were Rs 7.25 trillion, 55% of the FY23 target.
The implementation of the budget announcement to levy additional basic excise duty at the rate of Rs 2 per litre on the sale of unblended motor spirit from November 1 will also aid tax collections.
The Centre may garner about Rs 30,000-40,000 crore from windfall taxes on petroleum products. On July 1, it imposed special additional excise duty on crude and export taxes on petrol, diesel and ATF. The tax on petrol was removed subsequently. The levies have since been revised on a fortnightly basis, depending on crude prices and the refining spreads.
The Centre’s excise duty receipts are budgeted to be Rs 3.35 trillion for FY23 while CGST s estimated to be Rs 6.6 trillion.
The Central Board of Indirect Taxes and Customs (CBIC) has instructed filed formations to augment revenues by accelerating the issuance of final orders on tax payment mismatches, taking steps to resolve disputes and faster clearance of goods by customs.
The government is banking on extra tax revenues to fund additional subsidy expenditures to the tune of about Rs 2.8 trillion over the budgeted level.
An expected growth of about 25-30% on year in direct taxes may help the Centre garner Rs 3.8 trillion in extra tax revenues compared with the budget target of Rs 14.2 trillion. Extra direct and indirect tax receipts could fetch the Centre to collect about Rs 4.3 trillion in additional gross tax revenues as against the FY23BE of Rs 27.6 trillion.
The net (post-devolution) tax revenue for the Centre could be around Rs 2.7 trillion higher than the BE of Rs 19.3 trillion. This would give comfort to fund additional expenditure on subsidies even though non-tax revenues may see a shortfall of about Rs 50,000 crore in FY23.
[The Financial Express]
