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INDIA BUSINESS WORLD - October 1st October 15th 2008
GROWTH IN DIRECT TAXES FALLS TO 25.5% IN SEPT
DIRECT tax collections, which had remained buoyant till now, appear to be showing some early signs of slowdown. Overall direct tax kitty grew 25.51% at Rs 62,788 crore in September 2008 compared to 38.08% year ago. Advance tax payments, based on taxpayers’ projected income giving a clear indication of industry’s performance in coming months, were up 20.7% compared to 29.6% in September 2007.
Any slippage in the direct tax growth would bring government’s fiscal situation under pressure. Banking on the upbeat growth witnessed in direct tax collections, the government had scaled up the collection target set in budget from Rs 3,65,000 crore to a little less than Rs 4,00,000 crore. A growth of at least 25.6% is required to achieve the revised target, which would have helped the government in meeting its additional funding requirements arising out of the revised pay scales of its employees, mega farm debt waiver package and subsidies. To achieve the initial budget estimate, direct taxes need to grow by 16.07%.
Cumulative growth in direct tax collections, however gives some comfort. Net direct tax collections during first six months of the present fiscal (April-September 2008) stood at Rs 147,197 crore, up from Rs 111,055 crore, registering a growth of 32.54%. Growth in corporate taxes was 35.65% at Rs 95,283 crore as against Rs 70,240 crore in the same period last fiscal. Personal income tax, including fringe benefit tax (FBT), securities transaction tax (STT) and banking cash transaction tax (BCTT) grew at 26.94% to Rs 51,701 crore as against Rs 40,729 crore. FBT was up 62.23% at Rs 3,580 crore in April-September 2008 as against Rs 2,207 crore in the same period last fiscal.
Lacklustre stock markets took its toll on STT, which grew just 2.72% at Rs 3,182 crore against Rs 3,098 crore in the year-ago period. BCTT was up 17.65% at Rs 320 crore as against Rs 272 crore in April-September, 2007, an official statement said.
Advance tax payments grew 20.7% Rs 60,800 crore in September 2008. The last date to pay the second instalment of advance tax was September 15. Advance tax is paid in four instalments — June, September, December and March.
Growth in corporate tax deducted at source (TDS) remained above 52% and personal income tax TDS grew at 28%. Corporate TDS collections stood at Rs 30,810 crore as on September 30, 2008 against Rs 20,210 crore during the corresponding period last year. Personal income tax TDS stood at Rs 33,276 crore as against Rs 26,002 crore in the same period.
Self-assessment tax paid by both corporate and non-corporate taxpayers, voluntarily before filing their tax returns, registered substantial growth at 111% and 71%, respectively.
Continued high growth in TDS and FBT collections indicates inherent strength of the Indian economy and continued improvement in tax administration. Higher growth in self-assessment tax indicates continued improvement in tax compliance levels.
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