“India on the way to a $5 trillion economy”: FinMin on tax revenues

The focus on capital spending in the recently announced fiscal year budget will boost manufacturing and tax revenues, keeping India on track to a $5 trillion economy, the Treasury said Thursday.

Tax receipts rose a record 34 percent to 27.07 lakhcrore in the past fiscal year, which the ministry says is “notable evidence of the economy’s rapid recovery” from successive waves of COVID-19.

“The central government’s focus on making India a global economic powerhouse and the numerous measures taken to that end have been directly reflected in India’s GDP growth in recent years.

“This has resulted in increased revenue collection for the Treasury and has kept India on track to a $5 trillion economy…” the ministry said in a statement.

In 2019, Prime Minister Narendra Modi envisioned India becoming a $5 trillion economy and a global economic powerhouse. India’s GDP is estimated to be around USD 3 trillion in 2021-22.

The ministry said barring a brief setback due to COVID-19, the government has kept nominal GDP growth above 10 percent in recent years. GST, a simplified method of collecting indirect taxes, was a revolutionary move boosting India’s GDP.

“With a major investment spurt in the Union budget of 2022-23, the coming years will see an increase in domestic manufacturing as well as employment growth. This in turn will directly increase the tax levy to the Treasury,” the ministry said.

Gross corporate taxes in 2021-22 were Rs 8.6 lakh crore compared to Rs 6.5 lakh crore in the previous year.

This, the ministry said, shows that the new simplified tax regime, with low rates and no exceptions, has delivered on its promise by improving business activity for the corporate sector, boosting India’s economy and increasing tax revenues for the government.

In the last financial year, direct tax collection rose a record 49 per cent to Rs 14.10 crore, while indirect taxes grew 20 per cent to Rs 12.90 crore – reflecting the upswing in the economy and the impact of the Anti-tax reflects evasive measures.

For the current fiscal year, capital expenditure (capex) is expected to rise 35.4 per cent to Rs 7.5 lakh crore to continue the public investment-led recovery of the pandemic-hit economy. The capex over the last year has been fixed at Rs 5.5 lakh crore.

(Only the headline and image of this report may have been edited by Business Standard contributors; the rest of the content is auto-generated from a syndicated feed.)

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