Gross tax revenues to grow by 11.1% to 38 tn in FY25: ICRA

Govt robust tax collection: The interim budget 2024 is all set to be presented on Feb 1, since it is just a vote-on-account, no big bang announcement on the taxation front is expected.  However, the momentum of gross tax collection is likely to continue in FY25 as well. According to ICRA, the GoI’s gross tax revenues (GTR) in FY2025 are projected to be at Rs 38 trillion, 11.1 per cent more than the projected level for FY24. 

Direct Tax Collection

According to ICRA, direct tax revenues are projected to grow by 12 per cent in FY2025, based on expectations that benign levels of commodity prices would augur favourably on the profitability of corporates, and hence such tax collections and the continued efforts by the Government to improve compliance are likely to support personal income tax inflows in FY2025 amid widening of the tax base. 

Indirect Tax Revenues

Indirect tax is expected to increase by 9.9 per cent in FY2025, with GST likely to continue to outshine other tax heads like the Union Excise duty. 

“The projected growth of 12.5 per cent in GST revenues (including compensation cess) for FY2025 stems from the ongoing healthy momentum of domestic transactions, including consumption of services. Nevertheless, similar to FY2024, the growth in GST revenues from imported goods would be relatively lower, amid expectations of a tepid global growth,” ICRA said. 

Tax Buoyancy

After declining to 0.8 in FY2023 Prov. owing to the excise duty cut on auto fuels, the tax buoyancy is anticipated to witness a healthy rebound to 1.4 in FY2024 as against BE: 0.9 over FY2023 Prov, supported by the ongoing boost in direct tax collections as well as a shallower growth in nominal GDP vis-à-vis what was included in the Budget.