New Delhi: The central government will exceed its budget estimates for both direct and indirect tax collections this year, finance minister Arun Jaitley said on Wednesday.
He was responding to queries on the impact of demonetisation on tax revenues.
The central government had budgeted Rs8.47 trillion in direct taxes and Rs7.79 trillion in indirect taxes in the current fiscal.
If the government does manage to exceed its budget collections, it will reverse the trend of the last couple of years when direct tax collections have fallen substantially short of the initial budget estimates.
Tax revenues have been aided by additional revenue mobilization measures such as the income disclosure scheme under which the government is expected to receive at least Rs15,000 crore in taxes in the current financial year.
The increase in tax revenues is expected to counter the shortfall in divestment receipts and help the government achieve its fiscal deficit target of 3.5% in 2016-17. The government had budgeted Rs56,500 crore in divestment receipts for the year but has so far raised only Rs23, 529 crore.
Jaitley’s statement come at a time when many states have expressed concern about the fall in value added tax revenues for the last two months on account of the impact of demonetization on businesses.
Responding to statements made by West Bengal finance minister Amit Mitra on the massive impact of demonetization on tax revenues, Jaitley said that this trend is not reflected in all states.
“States like Haryana, Punjab and Assam have reported growth in their revenues in November..States that are governed well have done well,” Jaitley said in a press conference, taking a swipe at some opposition ruled states that have reported a fall in tax revenues.
Mitra said that the state saw a 2% contraction in tax revenues after demonetization as against a growth of 11% in the year ago period.
Some other states also expressed their concerns on falling tax revenues in the pre budget meeting with the finance minister on Wednesday. States have been asked by the Union government to furnish their tax collection numbers for the past two-three years.
“We have asked the states to furnish the data for the last two-three years so that a trend can be established,” Jaitley said.