On Friday, the finance ministry pointed out the direct tax collection throughout FY 2020-21 registering almost 5% growth over the revised estimate, making the experts optimistic about a lower fiscal deficit with the improvement in indirect tax collection than the revised estimate. The provisional figures indicate the collection at ₹9.45 lakh crore.

According to a statement made by the finance ministry, the net direct tax collections represent 104.46% of the revised estimates of ₹9.05 lakh crore of direct taxes for the FY 2020-21, but, it is lower than the net direct tax collection of FY 2019-20, which was ₹10.51 lakh crore. Net direct tax collections for FY21 have shown growth despite the natural challenges brought by the Covid-19 pandemic on the economy. Moreover, it highlighted that refund worth ₹2.61 lakh crore issued during the last fiscal year against ₹1.83 lakh crore during FY20. The ministry mentioned that despite an extremely challenging year, the advance tax collections for FY21 stand at ₹4.95 lakh crore, showing a growth of roughly 6.7% over the advance tax collections of the immediately preceding financial year of ₹4.64 lakh crore.

Devendra Kumar Pant, Chief Economist, India Ratings and Research, told that the economy is slowly recovering, with 3Q-FY21 manifesting a positive growth after the two back-to-back quarters of negative growth. That, along with indirect tax collections for FY21, suggests that the fiscal deficit in FY21 may be lower than the revised estimate, given that there is no slippage on the expenditure side. This is further supported by the central government canceling the last scheduled government borrowing in FY21.