By Nirbhay Kumar
New Delhi: In what suggests Covid impact was much less severe on middle and high income group people, personal income tax collection dipped only marginally by 2.3% to Rs 4.69 lakh crore in FY21 as compared to Rs 4.80 lakh crore in the previous financial year.
As per government data, the total personal income tax collection was Rs 4.61 lakh crore in FY19, Rs 4.80 lakh crore in FY20 and Rs 4.69 lakh crore in FY21.
The income tax collection includes other taxes such as interest tax, fringe benefit tax, income and expenditure tax.
Job losses were more in the lower income bracket side than in the high income group. Secondly, performance of some sectors during Covid such as telecom, IT and pharma have more than compensated for the lower performance by sector such as hospitality,” said Riaz Thingna, Director, Grant Thornton Advisory Pvt Ltd.
Several steps taken by the government have also protected its direct tax revenue. Measures to boost tax collection include widening of tax base, promoting voluntary compliance, promoting digital transactions, generating awareness through outreach programmes and curbing tax evasion.
In order to make tax compliance more convenient, pre-filled Income Tax Returns (ITR) have been provided to individual taxpayers.
While government has been persuading more people to pay income tax, the percentage of people actually paying tax is very low. Only about 1.5 crore people pay income tax in a country of 130 crores.
As per the current income tax slab, individuals earning upto Rs 2.5 lakh annually are exempted from paying income tax. With sizeable working people earning less than this threshold they are not in the tax bracket. The maximum job loss is estimated to have happened in this income bracket.
The data for FY22 (till December 7, 2021) showed the government has collected Rs 3.61 lakh crore in personal income tax.