An internal assessment by the Centre has revealed that gross tax revenue for the 2019-’20 financial year may fall short by around Rs 2 lakh crore, Business Standard reported on Monday. The Union Budget for the year had estimated the revenue to be around Rs 24.6 lakh crore.
The assessment was informally shared with the 15th Finance Commission, unidentified officials told Business Standard. The commission had asked the Ministry of Finance to give it a revised memorandum, due to the growth slowdown and present economic situation.
Gross tax revenue for 2018-’19 had also fallen short of the target. The actual gross tax revenue had been Rs 20.8 lakh crore, as against the estimate of Rs 22.7 lakh crore.
Of the gross tax revenue of Rs 24.6 lakh crore estimated for 2019-’20, the net-to-Centre tax revenue estimate stands at Rs 16.5 lakh crore. This means that the government expects amount due to the states in the form of devolution, Goods and Services Tax compensation, share of integrated GST and other items to be around Rs 8.1 lakh crore.
However, if the gross tax revenue falls short by around Rs 2 lakh crore, the net-to-Centre tax revenue will be around 15.1 lakh crore. This could take India’s fiscal deficit up to 4% of Gross Domestic Product, as against the budgeted 3.3%.
The Indian economy grew at just 5% in the April-June 2019 quarter, and 5.8% in the last quarter of 2018-’19. The Reserve Bank of India has estimated that growth will fall to 6.1% for the 2019-’20 financial year.
Direct tax collection saw a rise of merely 5% in the first half of the 2019-’20 financial year. This means it will have to rise by 27% in the second half of the year to achieve the government’s target of 17.3% growth.
There is also likely to be a shortfall in GST collection, Business Standard reported. Finance Minister Nirmala Sitharaman’s announcement last month of a corporate tax rate cut from 35% to 22% have led to fears of massive fiscal slippage in the 2019-’20 financial year.
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