Direct tax collections surge 182% to Rs 19.60 lakh crore in 10 years

India’s direct tax collections have soared by 182% over the last decade, reaching Rs 19.60 lakh crore in the fiscal year 2023-24, according to the income tax department’s 'Time Series Data.' This sharp increase in tax revenue marks a significant achievement for the Modi government, which came to power in 2014-15, when direct tax collections were Rs 6.96 lakh crore. The rise in tax collections has been driven by both corporate tax and personal income tax growth, alongside reforms aimed at expanding the tax base and enhancing compliance.

Corporate tax collections more than doubled, growing from Rs 4.29 lakh crore in 2014-15 to Rs 9.11 lakh crore in 2023-24. This reflects increased corporate earnings and better compliance driven by reforms like reduced corporate tax rates for certain sectors and digital enforcement. Personal income tax collections nearly quadrupled in the same period, rising from Rs 2.66 lakh crore to Rs 10.45 lakh crore in 2023-24. This surge in personal tax reflects growing individual incomes, wider tax coverage, and improved compliance due to initiatives like demonetization, mandatory PAN-Aadhaar linkage, and updated tax filing procedures.

The number of income tax returns filed, including revised returns, almost doubled from 4.04 crore in 2014-15 to over 8.61 crore by 2023-24. This rise highlights increased taxpayer engagement and the success of initiatives like faceless assessments, which have simplified the filing process. Furthermore, the total number of taxpayers saw significant growth, jumping from 5.70 crore in Assessment Year (AY) 2014-15 to 10.41 crore in AY 2023-24. The broadening of the taxpayer base can be attributed to steps such as GST implementation, expanded tax reporting mechanisms, and the crackdown on tax evasion.

The direct tax-to-GDP ratio, a key indicator of tax contribution to the economy, improved from 5.55% in 2014-15 to 6.64% in 2023-24. This suggests that India’s tax collection system has become more effective, with a larger share of economic output being captured through direct taxation. Similarly, tax buoyancy, which measures the efficiency of tax revenue growth relative to GDP growth, increased significantly from 0.86 in 2014-15 to 2.12 in 2023-24. This indicates that tax collections have been growing at more than double the rate of GDP growth, reflecting enhanced tax mobilization efficiency.

Reforms implemented by the Modi government, including the introduction of the Goods and Services Tax (GST), streamlined income tax filing processes, and measures against black money, have played a crucial role in this surge. Digital initiatives like the 'Transparent Taxation Platform' and tax return pre-filling have also contributed to the increased taxpayer base and compliance. The government’s focus on digitization, simplification, and enforcement has led to greater transparency and accountability in the tax system, which has driven this significant growth in direct tax collections.