Increased tax revenue skimming keeps India on track to become $5 trillion economy: Treasury Department


India’s GDP is estimated to be around US$3 trillion in 2021-22.

India’s GDP is estimated to be around US$3 trillion in 2021-22.

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

Tax receipts rose a record 34% 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 US$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% 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 corporation tax in 2021-22 was £8.6bn compared to £6.5bn the previous year.

This, the ministry said, shows that the new simplified tax regime, with low rates and no exemptions, 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 fiscal year, direct tax collection rose a record 49% to 14.10 lakhcrore, while indirect taxes grew 20% to 12.90 lakhcrore – reflecting the upturn in the economy and the impact of anti-tax evasion measures reflects.

For the current fiscal year, capital expenditure (capex) is expected to rise 35.4% to 7.5 lakh crore to continue the public investment-led recovery of the pandemic-hit economy. Capital spending last year was set at 5.5 lakh crore.

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