Gross tax/GDP ratio to stay at 11.4 per cent in FY24: Emkay

Interim Budget: The interim budget is just a few days away. And all analysts and experts are busy speculating the tax buoyancy going forward. Some are saying tax buoyancy will lose steam going forward. Some are saying it is here to stay here for a longer time. However, Emkay Global Financial Services in its pre-budget note said that the gross tax/GDP ratio is there to stay at 11.4 per cent in FY24.  

“We expect gross tax/GDP to stay steady at 11.4 per cent after a robust tax buoyancy in FY24 across segments. India's fiscal profile has become structurally healthy, amid better tax compliance, and resilience in domestic growth,” Emkay Global Financial Services said. 

According to Emkay, no major announcements for tax mobilization and rationalization are expected in the upcoming budget. However, they added further that some tinkering with the new concessional tax regime cannot be fully ruled out.  “Separately, non-tax revenue would still be healthy, led by RBI dividend amid consistent FX sales, but may fall short of last year’s bumper surplus,” Emkay said in its note. 

In its pre-budget note, the note mentioned that conventional divestment, the windfall gains may face pressure from stake sales of GoI’s large holdings, which are mainly concentrated in commodity companies and the utilities sector.