Mumbai’s share in overall kitty remains highest, but down at about 30% now
New Delhi, NFAPost: Bengaluru, which houses global and Indian IT giants, is set to overtake Delhi to become the second-highest contributor in the country’s direct tax collection, after Mumbai, an internal analysis of the Income-Tax Department showed.
India’s technology capital has shown a high growth of 525 per cent in direct tax collection, comprising personal income tax and corporation tax, during the period 2007-08 to 2022-23.
In FY23, it collected Rs 2.04 trillion as against Rs 32,692 crore in FY08. On the other hand, Mumbai and Delhi collected Rs 4.95 trillion and Rs 2.07 trillion, respectively, during the fiscal year ended |March 31, 2023.
In 2007-08 Mumbai was at Rs 1.14 trillion and Delhi at Rs 47,639 crore. The analysis highlighted that Mumbai’s contribution to the direct tax kitty remained the highest but it had come down to about 30% in 2022-23 from over 37% from 2007-08.
“Growth in Bengaluru is mainly due to the start-up ecosystem leading to a spike in individual tax collection. Also IT firms have grown multi-fold over the years. Infosys and Wipro are among top advance taxpayers,” a tax official told Business Standard. He said steep growth in direct taxes nationally was because of the rise in the tax kitty in cities like Bengaluru.
On the decline in Mumbai’s share in the direct tax kitty, the official is of the view that it is mainly due to the decentralisation of corporate offices over the years. Earlier almost all banks and big corporate houses had registered offices in Mumbai and tax used to be paid in a centralised way. Now over the years there have been transfers of permanent account numbers from Mumbai to other cities because corporate offices were decentralised, he said.
The combined share of Delhi, Bengaluru, Hyderabad, Pune, and Chennai in the direct tax corpus has risen to 44% in 2022-23. In FY23, Chennai collected Rs 1.05 trillion, Pune Rs 91,973 crore, and Hyderabad Rs 88,438 crore.
The revenue department wants laggard states such as Uttar Pradesh and Bihar to emulate the Bengaluru model and be significant contributors like the city.
Patna, for example, collected Rs 15,000 crore in FY23, as against Rs 2,368 crore in FY08, while Lucknow mopped up Rs 13,823 crore as against Rs 2,246 crore in 2007-08.
Direct tax collection jumped 463% to Rs 16.61 trillion in FY23 as against Rs 2.95 trillion in 2007-08.
Growth was 17.63% in FY23 over Rs 14.12 trillion in the previous year.
The Budget Estimate (BE) for direct tax stood at Rs 14.20 trillion and the Revised Estimate (RE) at Rs 16.50 trillion for FY23.
Direct tax collection has exceeded the BE by 16.97 per cent and RE by 0.69 per cent for the year.
The direct tax target for FY24 has been set at Rs 18.22 trillion, with corporation tax expected to bring in Rs 9.22 trillion and personal income tax projected to fetch Rs 9 trillion.
