India’s tax receipts surge 34% to beat Budget target

India’s tax receipts surge 34% to beat Budget target
India’s gross tax revenues surged 34% in 2021-22 to exceed ₹27 lakh crore ($356bn), lifting the tax-to-GDP ratio to 11.7%, up from 10.3% in the previous year, according to Revenue Secretary Tarun Bajaj.
The amount of tax raised was ₹5 lakh crore more than the Budget estimates for 2021-22, with direct taxes jumping by 49% and indirect taxes climbing by 20%.
“When we started the year, the Budgeted estimate was ₹22.17 lakh crore, 17% higher than the previous year,”. Bajaj said. “We are now close to ₹27.07 lakh crore, an increase of almost ₹5 lakh crore. These figures are tentative at the moment and they are likely to change and I hope that is on the upside, not the downside.”
Corporation tax collections rose by 56.1% and personal income tax grew about 43%, pushing overall direct tax growth to 49%, which the Revenue Secretary said was the “highest in a long time”.
He said: “Customs duty collections went up by 48%, as reflected in our robust export-import data, while excise duty collections have actually contracted 0.2% and the Central GST, which was a challenge for us, has grown by almost 30%.
“Commentators have said India’s tax-to-GDP ratio is very low. It was 10.3% in 2020-21 and has gone up to 11.7%, the highest since at least 1999. Direct taxes are 6.1% of GDP, and indirect taxes are 5.6%. So the criticism we faced last year, that our indirect taxes are higher than direct taxes, has also been addressed,” he added.
In a statement the Finance Ministry said the tax-GDP ratio was the ‘highest’ and the tax buoyancy ratio was ‘very healthy’ at 1.9. The tax buoyancy ratio, which measures growth in taxes relative to GDP growth, was 2.8 for direct taxes and 1.1 for indirect taxes in 2021-22. The ratio of direct to indirect taxes recovered from 0.9 in 2020-21 to 1.1 in 2021-22.

Rapid economic recovery
“This revenue growth has been propelled by rapid economic recovery after successive waves of Covid, supported by one of the largest immunisation programmes of the world run by the Government,” the finance ministry said, adding that the revenues represented a “robust recovery”.
ICRA chief economist Aditi Nayar said a large portion of the upside in revenues was shared with the States. She said: “The actual tax devolution to the State governments in 2021-22 stood at ₹8.8 lakh crore, a considerable ₹1.4 lakh crore higher than the revised estimates. After removing payments related to past arrears, the aggregate devolution to States has overshot the revised estimates by about ₹95,000 crore.”