INDIA BUSINESS WORLD - NOVEMBER 1^st – NOVEMBER 15^th 2008

DIRECT TAX COLLECTIONS GROW 11% IN OCTOBER TO 19.7K CR

AFTER remaining robust in the first six months of the current financial year, direct tax collections seem to be slowing down. Direct tax mopup grew by 11% in October 2008 to Rs 19,708 crore, compared to Rs 18,809 crore in the corresponding period of the last fiscal.

It is the first time this fiscal that the growth in collections has slipped below the growth rate of 25.6% required to achieve the set target. The government had scaled up the collection target in Budget 2008 from Rs 3,65,000 crore to a little less than Rs 4,00,000 crore. To achieve the initial Budget estimate, direct taxes need to grow by 16.07%.

Though, tax collections in October showed some signs of slowdown, robust growth in earlier months provide some comfort. Tax collections of corporate tax and personal income tax, including fringe benefit tax, securities transaction tax and banking cash transaction tax grew by 29.52% during April-October, 2008 at Rs 1,66,905 crore. Corporate tax collections grew 32.74% to Rs 1,05,174 crore while personal income tax rose 17.65 % in the first seven months of the financial year.

Fringe benefit tax grew 47.43% to Rs 4,061 crore during the period. The lacklustre stock market cast its shadow on securities transaction tax collections which witnessed a negative growth of 1.6% at Rs 3,724 crore. Banking cash transaction tax grew 17.73% to Rs 366 crore.

Finance ministry sources pointed that the main reason for the relatively slower growth in October was on account of corporates paying self assessment tax in September itself, as the last date for filing tax return forms was advanced to September 30.