Were the budget estimates for corporation and income taxes in 2016-17 a good coincidence or were they supposed to have been be qualified with a note?
Budget miscalculations? Credit: Reuters
New Delhi: For the first time in at least ten years, the budget estimates (BE) of India’s corporate tax and income tax revenue receipts have exactly matched their corresponding revised estimates (RE) – give or take a couple of decimal points.
A key part of every Union Budget is the receipt budget, a quick summary of how much tax and non-tax revenue the government was able to collect over the last year. It also includes capital receipts.
While tax revenue is further broken down into ten different categories, the two biggest sources of this revenue are ‘corporation taxes’ and ‘taxes on income’. The receipt budget for 2017-18 breaks down the 2016-17’s budget estimates and revised estimates for all tax revenue receipts.
For 2016-17, the budget estimate (BE) for corporate tax revenue was Rs 4,93,923.55 crore. The revised estimate (RE) is Rs 4,93923.50. That’s a difference of less than one crore rupees. Corporation tax revenue is broken down into four categories – collections, surcharge, education cess and miscellaneous receipts.
For 2016-17, the BE for taxes on income – which includes collections and surcharges as well as a whole host of other taxes including the security transaction tax – was Rs 3,53,173.68 crore. The RE for the same category in the same year is Rs 3,53,173.70. Again, a difference of less than one crore rupees.
| Financial Year | Corporate Tax Receipts (Rs crore) | Income Tax Receipts (Rs crore) | ||
| (Budget Estimate) | (Revised Estimate) | (Budget Estimate) | (Revised Estimate) | |
| 2016-17 | 493923.55 | 493923.50 | 353173.68 | 353173.70 |
| 2015-16 | 470628.00 | 452969.68 | 327367.00 | 299051.24 |
| 2014-15 | 451005.00 | 426079.00 | 284266.00 | 278599.00 |
| 2013-14 | 419520.00 | 393677.00 | 247369.00 | 241691.00 |
| 2012-13 | 373227.00 | 358874.00 | 195786.00 | 206095.00 |
| 2011-12 | 359990.00 | 327680.00 | 172026.00 | 171879.00 |
| 2010-11 | 301331.00 | 296377.00 | 128066.00 | 149066.00 |
| 2009-10 | 256725.00 | 255076.00 | 112850.00 | 131421.00 |
| 2008-09 | 226361.00 | 222000.00 | 138314.00 | 122600.00 |
| 2007-08 | 168401.00 | 186125.00 | 98774.00 | 118320.00 |
A quick look at the differences between BE and RE over the last two years, for these two revenue receipt categories, shows that usually the BE is off by anywhere between Rs 5,000 crore (in a handful of cases) to Rs 20,000-30,000 crore.
“This is certainly unusual. I don’t think I’ve seen this before, where both corporate tax and income tax almost exactly match up,” said a senior economist, who has helped formulate previous Budgets.
What explains these extremely accurate budget estimates for 2016-17? Multiple economists The Wire spoke to pointed out that there were a handful explanations. The simplest reasons include it being an error or a coincidence – and that the “actuals for 2016-17” that will come out next year will be different.
Another explanation is that because the Budget was moved up (and its date was in doubt due to other issues such as the Election Commission’s verdict), the revised estimates might not be as accurate as it was for other years.
“There could be some factors, such as not knowing how much revenue the second income disclosure scheme will come in and so on. Moving up the Budget date might not have helped. However, in this cases they should really have put an asterix on these numbers and qualified it through a note at the end of the document, saying that the calculations came out like this because there is some uncertainty,” a former chief economic adviser told The Wire.
Yet another explanation is that the numbers are just downright wrong or have been massaged. The head of a finance policy think-tank told The Wire that some numbers should be ideally taken with a “pinch of salt”.
“A 1 crore difference? Are you kidding me? After the budget came out I called up and spoke with finance ministry officials and they said that they are sticking by these numbers. Some of these numbers, in most Budgets, you can’t take just at face-value and this is largely known,” the think-tank head’s said.
