Higher tax collections and lower devolution of taxes to states pushed the central government’s revenue up in the month of October 2020. The Centre witnessed its first increase in non-debt receipts since the lockdown in October, according to the Centre for Monitoring Indian Economy. At Rs 1.4 lakh crore, receipts rose 46.7 per cent on-year. Both tax and non-tax revenues marked over 50 per cent growth in mobilisation during the month, CMIE added. After contracting sharply by 24.5 per cent in the first six months of the current fiscal year, net tax receipts rose 54.1 per cent on-year to Rs 1.2 lakh crore in October.
The income tax collections have improved since the country stepped into the unlock phase. Income tax collections returned to a growth of 2.6 per cent in September 2020 and further improved to 16.6 per cent in October. This also helped to raise the gross tax collections, which grew by 16.9 per cent on-year to Rs 1.5 lakh crore in October 2020.
While the corporation tax once again witnessed a contraction, its rate of contraction narrowed. At 4.9 per cent contraction, it remained at the lowest registered level in the current fiscal. Among indirect taxes, excise duty collections rose to Rs 1.01 lakh crore in October, touching its highest level since January 2020. This is a reflection of a gradual improvement in imports from the shock of the lockdown, CMIE underlined.
On the other hand, non-tax revenues also reported a handsome growth of 58.4 per cent in October 2020, rising to Rs 23,930 crore from Rs 15,110 crore in the same month of the previous year. This has been attributed to a surge in income earned from economic services and the dividend received from PSUs. Income from economic services, which mainly comprise leases and license fees, increased from Rs 9,700 crore in October 2019 to Rs 12,240 crore in October 2020.
Meanwhile, “despite the recent pick-up in revenue receipts, achieving the annual target is next to impossible for the government,” CMIE said. The Centre managed to garner only 34 per cent of its targeted revenue receipts for 2020-21 by October. Usually, by this time of the year, the government attains nearly half its revenue target for the year.