Fears of a trillion-dollar deficit in tax collections in the current fiscal year amid a climate of economic downturn

New delhi date. October 21, 2019, Monday

In an internal assessment conducted by the central government, the total revenue through current fiscal year tax is estimated to be about Rs 2 trillion deficit. In the Budget for the financial year 1-3, it was estimated that revenue would be Rs 5.5 trillion through taxes.

The Finance Ministry submitted its estimate to the Finance Commission on the 15th. The Finance Commission has sought a fresh application from the Finance Ministry on diminished economic conditions, tax flows and fiscal conditions. In the fiscal year 1-3, the revenues through taxation were estimated at Rs 1.8 trillion against the estimate of Rs 5.5 trillion.

Thus, in the last financial year, the revenue through taxation was reduced by Rs 1.8 trillion. In the last financial year, the country's economic growth rate was at a five-year low, with a growth rate of 5.5 percent.

A deficit in income through taxation would mean a lack of resources to allocate money to the states. Net revenues through the central tax have been estimated at Rs 1.8 trillion in the current financial year. This means the amount of money to be paid to the states will be Rs 5.5 trillion.

Other revenues and expenditures in the current fiscal year will be as per the budget estimates and if the gross tax revenue falls by two trillion rupees, the country's fiscal deficit will increase to 5 percent of GDP in the current fiscal year, which is projected at 8 percent of the budget.

Gross tax revenue is projected to remain low despite the economy expected to improve in the last six months of the current fiscal year. Direct tax collections have seen a growth of only 5% so far this year. If the direct tax recovery is to be achieved as per the budget target, then the rest of the period will require a 5% increase in the recovery. The Budget is targeted at growth of 5.5%. Apart from direct taxes, revenue through GST is also advocating for a reduction.