Finance: Strong tax kitty likely to give spending cushion to Centre

NEW DELHI: The Centre is banking on the buoyancy in tax collections seen during the initial part of the year to help it scale the budget target – as was the case last year- providing it much-needed resources to meet higher spending needs, especially before the crucial assembly and general elections.

“We will do better than what we had expected at the start of the financial year. The overall tax receipts will be higher as we were conservative in our estimates,” a senior finance ministry official told TOI. A part of the optimism stems from the strong growth in income tax returns and better GST compliance. Additionally, the economy is holding up despite the global headwinds.
Data released by the finance ministry on Friday estimated that direct tax collections during the fiscal year up to August 10 were 15.7% higher at over Rs 6.5 lakh crore. On a net basis, four months into the financial year, net collections were pegged at over Rs 5.8 lakh crore – 17.3% higher than a year ago and nearly a third of the full year target.

During the current financial year, tax receipts for the Centre (on a net basis) are projected to be 11.7% higher. By all indications, GST collections are on course to meet the target, although there may be some pressure on customs, given the weak imports and lower commodity prices.
While disinvestment receipts are budgeted at Rs 51,000 crore, a bounty awaits on the dividend front, with RBI announcing a Rs 87,416-crore payout, 1.8 times the budget receipts from the central bank, state-run banks and financial institutions. With banks putting up a strong show, the picture is expected to get rosier. Pressure on the spending side is expected to come from higher than budgeted subsidies.