Govt Expects to Meet FY27 Budget Tax Collection Target Despite Possible Excise Duty Shortfall

New Delhi, Oct 14 (KNN) The Finance Ministry is hopeful of meeting the budgetary targets for overall net tax collections this fiscal year, despite a possible shortfall in Central Excise Duty receipts, a senior government official said on Tuesday.

Stronger collections from direct taxes, goods and services tax (GST) and customs were expected to offset the shortfall in excise duty, the official added.

The Union Budget has pegged net tax collections, including direct and indirect taxes, at Rs 28.7 lakh crore for the current fiscal year.

Net direct tax collections rose 13 per cent year-on-year to Rs 12.1 lakh crore between April 1 and September 17, according to Income Tax Department data. Central GST (CGST) collections crossed Rs 2.42 lakh crore during April-September.

“Budget tax targets are likely to be met this fiscal year,” the official said.

“There may be a shortfall in excise duty collections. Higher collections from direct taxes, GST and customs are expected to compensate for the losses,” he added, the businessline reported.

GST Measures And Taxpayer Base

The official said recent GST Council recommendations on refunds for input services and capital goods, along with the unblocking of input tax credit (ITC) for various items, would benefit a majority of sectors and could also have an impact on tax collections.

At its October 8 meeting, the GST Council recommended including ITC availed on input services and capital goods on or after November 1, 2026, in the calculation of refunds under the inverted duty structure.

The government also expects the number of GST assessees to increase following the easing of registration procedures. 

“We have had discussions on improving the base and also the quality of disclosure. We can leverage technology to increase the base without the exercise being intrusive,” he said, adding that some analysis had also been shared with the States.

India currently has around 1.7 crore registered GST taxpayers, of whom 97 lakh fall under State tax administrations, with the remaining taxpayers under Central formations.

Officials emphasised that State tax authorities should improve cash tax collections and address cases where businesses' output tax liabilities are close to or lower than their input tax credit claims.

Drawing a parallel with the Income Tax Department’s ‘Nudge’ campaign, an official said, “We need to strengthen our tech system and adopt a non-intrusive approach. We have to improve data analytics, find gaps, and increase outreach to taxpayers to make them understand the benefits of compliance,” as quoted by the businessline.

B2C E-Invoicing From April 2027

Officials said business-to-consumer (B2C) e-invoicing will extend data capture across the supply chain, from suppliers to final buyers. Currently, businesses with an average annual turnover of Rs 5 crore must generate e-invoices for business-to-business (B2B) sales. Following the GST Council’s September 2024 recommendation for a pilot, the government plans to introduce voluntary B2C e-invoicing from April 1, 2027.

“We are encouraging states to use the GSTN system for B2C e-invoicing. As regards businesses, we will show them the benefits of B2C e-invoicing and the impact it will have on audit compliance. Since tax officers will receive granular data from B2B and B2C e-invoices, they will enjoy better treatment in tax administration,” an official said.

(KNN Bureau)