Rise in tax collection driven by force formalisation: Experts

Experts opine that the recent surge in tax collection has been driven by forced formalisation and a change in the composition of consumption in the aftermath of Covid-19 pandemic, reported Financial Express. Gross tax revenue in the June 2021 quarter rose by 33 per cent over the same period in 2019-20 (before the pandemic struck). According to economist Pronab Sen, when income inequality grows and wealth gets redistributed in favour of the more privileged, the broader private consumption gets a hit. But the consumption pattern gravitates more towards discretionary items, including luxury goods (which attract higher GST rates) than the essentials, he added. Industry executives in some of the labour-intensive sectors FE spoke to also lamented that the formalisation may have been a forced process, driven mostly by the Covid-induced extinction of several unorganised sector entities, rather than an organic one. This has led to greater consumer reliance on the formal sector, even though overall consumption demand remains sticky due to large-scale income losses.

References
1. https://www.financialexpress.com/economy/forced-formalisation-behind-the-surge-in-tax-collections/2333509/
CMIE STATISTICS
Unemployment Rate (30-DAY MVG. AVG.)
Per cent
7.5 -0.3
Consumer Sentiments Index
Base September-December 2015
58.0 0.0
Consumer Expectations Index
Base September-December 2015
60.6 +0.5
Current Economic Conditions Index
Base September-December 2015
53.9 -0.8
Quarterly CapEx Aggregates
(Rs.trillion) Dec 20 Mar 21 Jun 21 Sep 21
New projects 1.50 2.20 2.55 1.10
Completed projects 0.87 1.17 0.73 0.92
Stalled projects 0.30 0.26 0.32 0.03
Revived projects 0.15 0.22 0.12 0.19
Implementation stalled projects 0.20 0.32 0.25 0.22
Updated on: 21 Oct 2021 3:28PM
Quarterly Financials of Listed Companies
(% change) Dec 20 Mar 21 Jun 21 Sep 21
All listed Companies
 Income 1.6 14.9 42.0 18.3
 Expenses 0.1 7.3 42.2 18.2
 Net profit 58.3 326.2 125.3 28.0
 PAT margin (%) 8.4 8.9 9.0 17.1
 Count of Cos. 4,451 4,364 4,348 178
Non-financial Companies
 Income 0.1 17.4 60.7 21.8
 Expenses -0.7 10.5 62.8 23.2
 Net profit 52.4 221.6 179.7 27.0
 PAT margin (%) 8.8 9.1 8.4 16.3
 Net fixed assets 2.3 7.4
 Current assets 4.4 13.2
 Current liabilities 0.8 17.4
 Borrowings -4.3 3.0
 Reserves & surplus 11.9 4.2
 Count of Cos. 3,299 3,252 3,251 130
Numbers are net of P&E
Updated on: 21 Oct 2021 3:28PM
Annual Financials of All Companies
(% change) FY19 FY20 FY21
All Companies
 Income 13.3 0.2 -1.7
 Expenses 13.6 0.2 -4.3
 Net profit 15.2 -10.4 50.0
 PAT margin (%) 2.1 2.1 7.3
 Assets 9.8 8.5 12.9
 Net worth 8.5 4.5 13.7
 RONW (%) 3.8 3.5 9.0
 Count of Cos. 32,100 31,012 5,853
Non-financial Companies
 Income 14.0 -1.7 -4.1
 Expenses 14.2 -1.4 -6.2
 Net profit 21.2 -21.2 37.6
 PAT margin (%) 2.9 2.3 6.8
 Net fixed assets 5.6 10.0 2.6
 Net worth 7.9 2.1 11.6
 RONW (%) 6.4 4.9 9.9
 Debt / Equity (times) 1.0 1.1 0.7
 Interest cover (times) 2.3 1.9 3.7
 Net working capital cycle (days) 74 81 70
 Count of Cos. 25,659 24,739 4,261
Numbers are net of P&E
Updated on: 19 Oct 2021 1:55PM