Budget 2024: Direct tax to GDP ratio peaks to a 15 year high in FY23

Budget 2024: India's direct tax to GDP ratio hits a 15 year high of 6.11% in FY23, showed data released by Central Board of Direct Taxes. As per government data, the number of tax payers, filing income tax returns has also more than doubled to 7.78 crore in the past 10 years. The numbers increased by 104.91%.

The tax buoyancy declined to 1.18 in FY23 from 2.52 in FY22 and 1.29 in the pre-Covid year of FY19. Tax buoyancy is an indicator to measure efficiency and responsiveness of revenue mobilization in response to growth in the Gross domestic product or National income.

Direct tax collection

As per the data, the direct tax contribution to the total tax collection reached pre-pandemic levels. Direct tax majorly comprises of corporate tax and personal income tax. In FY23 direct taxes made up 54.62% of the government’s total tax revenue, up from 52.27% in FY22 and 46.84% in FY21 – the lowest in 15 years.

Net direct tax collections, which reflect collections after refunds, “increased by 160.52% to Rs 16.63 lakh crore in FY23 from Rs 6.39 lakh crore in FY14”, CBDT said in a statement.

Maharashtra accounted for 36.4% (Rs 6.05 lakh crore) of the overall direct tax collections in the country in FY23, followed by Delhi at 13.3%(Rs 2.22 lakh crore), Karnataka at 12.5% (Rs 2.08 lakh crore) and Tamil Nadu at 6.4% (Rs 1.07 lakh crore).