The total revenue from corporate and excise tax collections is expected to be in line with budget estimates for the current fiscal year, financial services secretary Ajay Seth said on Thursday.
Corporate tax, which is the second largest component of direct taxes after personal income tax, as well as excise duty collections, declined by 10.4 per cent during the first four months of the ongoing fiscal.
This comes against an over 14 per cent plunge in tax mop-up in the first quarter as against an over 26 per cent jump in the in the year-ago period.
Seth allayed concerns of a fall in annual tax collections, saying one should look at a longer-time frame when it comes to tax mop-up.
"We should not look at a few months' data and try to find a long term trend in that instead we should wait for at last another quarter to see long-term trend or data to reach a conclusion...
"My sense is that whatever numbers are there in budget estimates and revenues, those will be realized," Seth said.
Seth was speaking to reporters on the sidelines of the final day of the three-day global SME financing summit organised by SIDBI as part of India's G20 presidency.
During the April-July period, the gross tax revenue stood at Rs 8.94 lakh core, just 2.8 per cent higher than the same period last year, according to data from the Controller General of Accounts.
In order to meet the target of Rs 33.61 lakh crore in FY24, which is 10.1 per cent higher from Rs 30.54 lakh crore collected in FY23, gross tax collections will have to rise 12.9 per cent on-year during August-March.
Corporate tax collection in April-July this year was at Rs 1.76 lakh crore, 10.4 per cent lower on-year, while central GST collection rose 16.6 per cent to Rs 2.74 lakh crore. GST collected from compensation cess was also higher 10.2 per cent at Rs 46,316 crore.
While tax collections have seen a muted growth in the quarter ended June, capital expenditure has seen a strong growth of 59 per cent, indicating a steady improvement in the expenditure mix.
Muted tax collections have led to widening of the fiscal deficit to 25.3 per cent of the budgeted target in the first quarter of FY24 compared to 21.2 per cent witnessed in the same period last year.
Meanwhile, Reserve Bank of India deputy governor Rabi Sankar, who was also present at the event said that small businesses needed productivity enhancement and not just financing, which can be achieved through populating the digital public infrastructure (DPI).
The potential of DPI is so huge and it can learn a lot from UPI, which is averaging 340 million transactions a day now. In fact DPIs and UPI or similar platforms can build on each other, Sankar said.
On the recently-launched frictionless lending which is being run on a pilot basis in Madhya Pradesh, Tamil Nadu, Maharashtra, Karnataka and Gujarat (for dairy farmers), Sankar said when scaled up this can change the entire landscape of lending to small businesses as the project is based on seamless flow of data from different agencies including states to the banks.
He said the project has already lowered the customer acquisition cost by 70 per cent for banks while for borrowers, it has lowered the cost of funds by at least 6 per cent.