Direct Taxes

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Context

India’s net direct tax collections growth, which stood at about 17% for this year by early March, is expected to moderate to 15% for the full financial year 2022-23- Finance Ministry.

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More on the news

The government’s net receipts from direct taxes had grown about 49% in 2021-22 to almost ₹14.09 lakh crore.
The sharp growth was attributable to the economy’s gradual recovery from the COVID-19 pandemic lockdowns that had hit economic activity in the previous year.

Slowing growth

Inflows of direct taxes, that include corporate income tax, personal income tax and the securities transaction tax (STT), had risen almost 20% as of mid-December 2022.
But each successive month has recorded a slight slowdown in the growth rate.
By February 10, the growth rate stood at 18.4%, which declined further to 16.8% by March 10.
The total net direct tax collection stood at ₹13.73 lakh crore. That amount was 7% of the Budget estimates for 2022-23 and 83.2% of the revised estimates for direct taxes.

MAINS PRACTICE QUESTION

Q. Direct taxes display the importance of taxes by reducing income equalities with its progressive tax structure and they are also useful in controlling inflation as any change in their rates can help in regulating demand and supply in the economy. Analyse.