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Tax revenue in the Union Budget for 2021-22 was projected to grow by 17% to Rs 22.17 lakh crore as against the revised estimate of Rs 19 lakh crore. Union Budget was presented on 1scheduled tribe February, 2021 when 1scheduled tribe The COVID wave in India had subsided but the world was facing continuous waves.
As against the Union Budget Estimate of Rs 22.17 lakh crore, the revenue collection as per pre-actual figures is Rupee.27.07 lakh crore, approx. Rupee.5 lakh crore more than the budget estimate. This is an increase of 34% over the previous years’ revenue collection,20.27 lakh crore supported by a 49% increase in direct taxes and a 20% increase in indirect taxes. This revenue growth is driven by rapid economic recovery following successive waves of COVID-19, supported by one of the world’s largest vaccination programs run by the government. It also marks a strong recovery in the economy. These were also complemented with better compliance efforts in taxation. Various efforts were made by the tax administration on direct and indirect taxes to reduce the high compliance through the use of technology and artificial intelligence.
The highest tax-to-GDP ratio is 11.7% in 2021-22, with a direct tax-to-GDP ratio of 6.1% and an indirect tax-to-GDP ratio at 5.6%. The tax buoyancy (which is a measure of growth in tax revenue compared to GDP growth) stands at a very healthy figure of 1.9, with 2.8 for direct taxes and 1.1 for indirect taxes. The ratio of direct and indirect taxes went back from 0.9 in 2020-21 to 1.1 in 2021-22.
Gross Corporate Tax during 2021-22 Rs.,Rs 8.6 lakh crore as against Rs.,6.5 lakh crore last year, which shows that the new simplified tax regime has lived up to its promise with lower rates and no exemptions. During the year, the Income Tax Department gave a refund of Rs.,.24 lac cores. During the last two years, efforts have been made to clear the backlog of refunds to bring liquidity in the hands of businesses. During the year, 2.4 crore refunds were issued, including 2.01 crore pertaining to the year 2021-22, for which returns were filed till 31.scheduled tribe March 2021.
This has been made possible due to faster processing of returns. During 2021-22, 22.4% of returns were processed on the same day and about 75% of returns were processed in less than a month. The average processing time for returns during 2021-22 was 26 days. 7.14 crore returns were filed during the year as compared to 6.97 crore last year.
On indirect taxes, GST has seen an exemplary growth during 2021-22 despite two waves of the COVID-19 pandemic, CGST revenue increased by Rs.,4.6 lakh crore last year,5.9 lakh crore in 2021-22. Average Monthly Gross GST Revenue in 2021-22 Rs.,1.23 lakh crore as against Rs.,94,734 in 2020-21 and Rs.,1.01 lakh crore in 2019-20.
This again indicates a strong rebound in the economy. This has been accomplished due to various measures taken to improve compliance. GSTR-3B filing (percentage of previous month returns filed till month-end) increased from 74% in September 2020 to 87% in February 2022. GSTR-1 filing has increased from 54% in September 2020 to 82%. in February 2022. This also shows that the gap between GSTR-3B filing and GSTR-1 filing has reduced to the level of complete elimination. This shows that the GST ecosystem has appreciated invoicing-based discipline in GST, which not only benefits the GST revenue but also contributes to the overall formalization in the economy.
The level of economic recovery can also be seen from the value of e-way bills generated every month, which has improved from Rs.,Rs 16.9 lakh crore in January 2021,25.7 lakh crore in March 2022.
During 2021-22, the customs duty has witnessed a growth rate of 48%. During the last two years, the Government has undertaken a comprehensive review and rationalization of the Customs Tariff Structure through extensive consultations and crowd sourcing and has rationalized various exemptions and simplified the tariff structure.
It is expected that the recovery trend in the government’s economy and tax revenue will continue to increase.
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