The Finance Ministry on Thursday released the details of the total tax collection in the financial year 2021-22. According to government data, there has been a strong growth of 49% in direct tax and 30% in indirect tax in 2021-22.
In the financial year 2021-22, the total tax revenue of the Modi government reached Rs 27.07 lakh crore with a record increase of 34%. This is about Rs 5 lakh crore more than the budget estimate. In the budget for 2021-22, the income from tax was estimated to be Rs 22.17 lakh crore. The tax revenue in 2020-21 was Rs 20.27 lakh crore.
Read | Income Tax department witnesses highest net collection in history, 35% more than last year
Direct tax hiked by 49%
According to the data, in the financial year 2021-22, the direct tax collection reached Rs 14.10 lakh crore with a sharp increase of 49%. Whereas there has been a 30% increase in indirect tax collection and it stood at Rs 12.90 lakh crore. Revenue Secretary Tarun Bajaj said that the direct tax collection was Rs 3.02 lakh crore more than the budget estimate of the last financial year. Income from customs duty has also increased by 41%.
According to Tarun Bajaj, an increase in tax revenue reflects an improvement in the economy. He told that the collection of excise duty has also been more than the budget estimate. The tax-to-GDP ratio stood at 11.7% in 2021-22. The tax-to-GDP ratio stood at 10.3% in the financial year 2020-21. This is the highest since 1999.
What is Direct tax?
A tax, such as income tax, which is levied on the income or profits of the person who pays it, rather than on goods or services is known as direct tax. In case of direct tax, the burden cannot be be shifted by the taxpayer to someone else. These are largely taxes on income or wealth. Income tax, corporation tax, property tax, inheritance tax and gift tax are examples of direct tax.
What is Indirect tax?
Indirect taxes are commonly used and imposed by the government in order to generate revenue. They are essentially fees that are levied equally upon taxpayers, no matter their income, so rich or poor, everyone has to pay them.
Indirect tax is a tax that can be passed on to another individual or entity. Indirect tax is generally imposed on suppliers or manufacturers who pass it on to the final consumer. Excise duty, customs duty, and Value-Added Tax (VAT) are examples of Indirect taxes.
