India’s direct tax-to-GDP ratio hit a 15-year high of 6.11 per cent in 2022-23, hovering near its peak of 6.3 per cent reached in 2007-08, according to data released by the Central Board of Direct Taxes ( CBDT ). The Finance Minister will present the Interim Budget 2024 on Feb 1st, the data on direct taxes comes just a week before that.
The data showed that the contribution of direct taxes – which majorly comprises corporate tax and personal income tax – to total tax collections has reached the pre-pandemic levels. In 2022-23, direct taxes made up 54.62 per cent of the government’s total tax revenue, up from 52.27 per cent in 2021-22 and 46.84 per cent in 2020-21 – the lowest in 15 years.
It can be concluded that if the central government meets its budget estimates for 2023-24, the direct tax-to-GDP ratio could rise further to around 6.2 per cent. However, economists expect the government to exceed its budget estimates of Rs 9.23 lakh crore for corporate tax and Rs 9.01 lakh crore for personal income tax. The estimates suggest that the direct tax-to-GDP ratio could reach an all-time high of 6.5 per cent this year.
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