Finance Minister Nirmala SitharamanImage Credit source: PTI
Due to increase in Income Tax and GST monthly collection, the government will be in a position to allocate more funds for farmers and social schemes while following fiscal prudence in the interim budget. The government will present its interim budget on February 1 before going to the general elections. In such a situation, in this budget, special attention can be given to the issues related to poor sections of the society, especially rural areas. According to a report, there is a jump in income and corporate tax collection in the current financial year. Due to this, the total direct tax collection may be approximately Rs 1 lakh crore more than the budget estimate. The government had set a budget target of raising Rs 18.23 lakh crore from direct taxes for the financial year 2023-24. The tax collection under this item till January 10, 2024 was Rs 14.70 lakh crore, which is 81 percent of the budget estimate. There are still about two and a half months left for the completion of the financial year.
What is the situation on the GST front?
On the GST front, the Central GST revenue is expected to be about Rs 10,000 crore more than the budget estimate of Rs 8.1 lakh crore. However, there is a possibility of a shortfall of about Rs 49,000 crore in excise duty and customs duty collections. The Centre’s gross tax revenue is expected to be Rs 60,000 crore more than the budget estimate of Rs 33.6 lakh crore. Rating agency ICRA had said in its budget assessment report that due to direct tax and GST collection in the next financial year, gross tax revenue will increase by 11 percent but the increase in excise duty and customs duty collection may be less. According to ICRA Ratings, ‘With the forecast of 9.5 percent growth of GDP at current prices, the tax jump in the financial year 2024-25 could be 1.2. It is estimated to be 1.4 in the current financial year.
These routes will open due to increase in tax collection
With the increase in tax collection, the government will be in a position to allocate more funds for social schemes like MNREGA, Rural Roads, PM Kisan Samman Nidhi and PM Vishwakarma Yojana without deviating from the fiscal empowerment path. In the current financial year, the difference between government receipts and expenditure i.e. fiscal deficit is estimated to be 5.9 percent of GDP. A target has been set to bring the fiscal deficit to 4.5 percent by 2025-26.
Sanjay Kumar, partner at Deloitte India, said that at present the government has some fiscal space and they would like to spend it in the interim budget. Kumar said that allocation for infrastructure, women-centric schemes is expected to increase in the interim budget of 2024-25. The size of the government budget for the current year was Rs 40 lakh crore and it is likely to increase by 10 percent to Rs 43-44 lakh crore in the next financial year.