The government is expected to close 2018-19 with a £6 billion shortfall in direct tax collections with mop-up till last week estimated at £113.8 billion, compared to the revised target of £120 billion. Only a savings on the spending side can help the Centre meet its fiscal deficit target as tax officials also fret over deficit in central goods and services tax (CGST).
Officials from the Central Board of Direct Taxes (CBDT) said the overall kitty for the last financial year is only expected to swell by a small amount over the next few days as there may be a few pending transfers, leaving a hole that is virtually impossible to fill. But, the government is happy with the fact that it has seen collections rise 13.5 per cent on a strong base, making it the third straight year of strong growth in collections.
While the officers always feared that the revised estimate would be tough to meet, the CBDT brass was pushing hard to meet the target and managed to mop up nearly £10 billion during the last three days of the fiscal year. Apart from collections of £111.8 billion reflected in the tax department's system, another £2 billion has been estimated to have collected in the Central TDS wing.
The shortfall, however, may not be limited to direct taxes as officials said the central GST collections could be around £3.5 to 4 billion short of target, despite a record haul in March. While the numbers will mean that tax officials have their task cut out for the current financial year, it also points to the need for more realistic targets.
But the government will budget for some savings on the spending front as some of the schemes announced in the February budget such as the farm income support, for which £2 billion was earmarked, may not see the full outgo.