India's direct tax growth momentum may be tough to sustain in FY24- govt source

NEW DELHI (Reuters) - The Indian government may find it difficult to maintain its current growth momentum in direct taxes in the next fiscal year as economic growth is expected to slow, a government official said on Friday.

Finance Minister Nirmala Sitharaman will present the Union Budget on Feb. 1, which will include projections for next year's tax collection.

Net direct tax collection was currently growing at 19.5% year on year, totaling 12.31 trillion rupees ($151.70 billion) in April 2022-January 10, 2023.

The expected lower nominal GDP growth in the next fiscal year could impact income tax collections, which include individual as well as corporate taxes, the government official told reporters.

India's nominal GDP, which includes inflation, is estimated to grow at 15.4%, and is likely to fall in 2023-24, hurting tax collections.

That, in turn, could put pressure on the federal government to reduce its fiscal deficit.

($1 = 81.1450 Indian rupees)

(Reporting by Nikunj Ohri and Manoj Kumar in New Delhi; Editing by Shilpa Jamkhandikar, Miral Fahmy and Nivedita Bhattacharjee)