As recently claimed by many tax officers, the country’s income tax and corporate tax collection for 2019–2020 is highly to hit its first fall, which will be the first tax fall in the last two decades. Prime Minister Narendra Modi and the BJP government were aiming for direct tax collection of over Rs. 13.5 trillion (nearly $189 billion). For the financial year of 2019 to 2020, the government was targeting nearly 17% increase on the total collection of Rs. 11.5 trillion collected for the previous financial year.
However, India is facing a steep decline in demand and businesses. This is making businesses and other companies cut out on investments and jobs in their sectors.
As of January 23, 2020, there has been a total tax collection of Rs. 7.3 trillion for 2019–2020. According to the authorities, there will be as low as 5% of increase instead of the estimated 17%. This growth has been recorded as the slowest in the last 11 years. The government is most likely to maintain its direct tax shortage under 3.8% of a total domestic product.
For annual revenue, the country’s direct taxes make up 80% of the government’s estimate. However, this downfall is likely to cause India to borrow money from foreign countries.
Tax officials all over the country are facing dual situations. They are yet to decide whether to raise the total complaints of harassment from various businesses—known as “tax terrorism”—all over India or to follow government’ instructions and meet the target.