It has been reported that After four years of setting ambitious tax targets and missing them, a more grounded assessment in the Union Budget for 2021-22 seems to have paid-off for the Indian government.
Conservative tax revenue targets and better-than-expected nominal GDP growth will help India in surpassing its budgeted estimates for the first time since 2018, the report said.
In the first eight months of 2021-22, India had earned net tax revenue of Rs 11.3 lakh crore—65% higher than last fiscal and 73.4% of its Rs 15.4 lakh crore budget estimate, according to the government’s monthly accounts. The gross tax revenue collections during the same period stood at Rs 15.4 lakh crore—69.4% of the Rs 22.1 lakh crore target, the report said.
Tax collections tend to rise in the last quarter of the year. On average, over the last 12 years, net tax collections between December and March were 93.6% of the total amount collected in the months between April-November. This year, the government needs to collect just 36% of the amount collected so far to meet its target.
More realistic targets mean better credibility. And some want the trend to continue in the upcoming budget, the report said.
Conservative estimates in the FY22 budget were “very different from some previous years when very ambitious tax revenue estimates eroded the credibility of the budget instantly as it was announced,” wrote HSBC Chief Economist Pranjul Bhandari in a pre-budget note. “It may be a good idea to stick to conservative tax revenue estimates this year as well, especially because there are huge uncertainties on the growth front.” (BloombergQuint)
