India’s Advance Tax Collections Skyrocket by 24% in Q2 FY24 to Rs 2.38 Trillion

In the second quarter of the current fiscal year, the Central government’s collection of advance direct taxes from companies, LLPs, and individuals increased significantly by 24% compared to the previous year, reaching a total of Rs 2.38 trillion, according to data available up to Saturday.  

The growth was primarily driven by a substantial rise in income tax collections and a recovery in corporate tax revenues. 

The improved profitability of corporations during the second quarter, attributed to reduced input costs, contributed to the strong performance in advance tax collection for the period.  

Furthermore, in the first quarter of FY24, advance tax receipts had grown by 14% compared to the previous year, and in the second quarter of FY23, they had increased by 10% compared to the previous year. 

Thanks to the contributions from advance tax payments and taxes deducted at source (TDS/TCS), direct tax collections after refunds reached Rs 8.64 trillion in the latest update, marking a substantial YoY increase of 23.4%. This growth rate significantly surpasses the earlier projection of a 9.4% annual increase for the entire fiscal year, suggesting that the annual target may be comfortably achieved. 

As of now, the direct tax collections constitute 47.4% of the fiscal year 2024 target, which is set at Rs 18.23 trillion. 

Previously, there were concerns due to a 10% decrease in corporate tax receipts during the April-July period and a similar decline in excise revenue.  

During this period, the gross tax revenue, which is the amount collected before refunds and before distribution to states, amounted to Rs 8.94 trillion, reflecting a modest 2.8% growth compared to the corresponding period of the previous year. This growth fell short of the required 10.1% increase needed to meet the Budget Estimate. 

Up to September 16, the direct tax collections included corporation tax amounting to Rs 4.16 trillion, a 13% increase compared to the same period in FY23, when it was Rs 3.68 trillion. This upswing in corporate tax receipts suggests that corporate profitability remained positive in Q2FY24, thanks to a continued decrease in raw material prices. 

Furthermore, income tax collections, including securities transaction tax, reached Rs 4.48 trillion, reflecting a robust annual increase of 36%. Direct tax refunds decreased by 10% year-on-year, totalling Rs 1.22 trillion up to September 16 in FY24, compared to Rs 1.36 trillion by September 17 in FY23. 

In the current fiscal year, TDs and TCS receipts amounted to Rs 5.14 trillion, securities transaction tax reached Rs 13,352 crore, and the equalisation levy stood at Rs 1,581 crore. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.