Direct tax collections are likely to remain muted in the second consecutive quarter of the current fiscal year with most top Indian cities witnessing double-digit contraction in receipts till August 20. Kolkata emerged the worst-affected metro city, reporting a drop of 60 percent in the mop up during April august 20. It was followed by Chennai and Delhi, which saw decline by 41 percent and 36 percent, respectively.
Mumbai was, however, one of the least affected regions, though collection was down there too. Mumbai, which has the highest share of 34 percent in overall direct tax collections, witnessed a drop by 13 percent, despite accounting for an ever growing share of total Covid-19 cases. Bengaluru is the only metro city showing growth of 10 percent at 30,777 crore. This is followed by Guhawati, which also reported an increase in collection by 4.7 percent at 1,212 crore compared to 1,158 crore during the same period a year ago.
As of August 20, the total net direct tax collections showed a drop of 26.3 percent at 1.89 trillion against 2.56 trillion a year ago. The downward trend is likely to continue in the September quarter too, which is a cause for concern, said an official. In the first quarter (April-june), direct tax mop up fell 25.3 percent to 1.25 trillion.
Other tier-1 cities such as Hyderabad, Pune, Chandigarh, and Ahmedabad also saw a massive drop of 30-45 percent in tax receipts till August 20 this year. Even corporate tax mop up till August 20 from major cities did not see much improvement. For instance, Mumbai collected 25,611 crore, followed by Bengaluru, which reported 12,521 crore and Delhi was at 7,989 crore.
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