THIS is one growth story that remains intact despite some signs of a
slowdown. Direct tax collections grew by over 38% in the first five
months (April-August) of the current fiscal to Rs 84,409 crore as
against Rs 61,030 crore in the year-ago period.
Belying apprehensions of slower industrial growth, corporate tax collections grew 43.49% to Rs 48,450 crore in April-August, 2008 as against Rs 33,766 crore in the same period of the last fiscal. Personal income tax, including fringe benefit tax (FBT), securities transaction tax (STT) and banking cash transaction tax (BCTT), grew 31.79% to Rs 35,840 crore.
Robust growth in direct taxes will help the central government in meeting fiscal targets. Finance minister P Chidambaram in his budget speech had pegged fiscal deficit at 2.5% of GDP and revenue deficit at 1% of GDP for 2008-09. He has said on several occasions the budget deficit targets would be met. The direct tax collection target was recently revised to 3,95,000 crore for the fiscal.
Tax deducted at source (TDS) showed impressive growth, particularly in corporate TDS. While overall growth in TDS stood at 40%, growth in corporate TDS was 55.22% in the period under review. Corporate TDS collections stood at Rs 26,445 crore as on August 31, 2008 compared to Rs 17,037 crore during the corresponding period last year.
This was also the result of several TDS verifications and surveys carried out by the Income-Tax department, which led to detection of hundreds of crore of rupees not deducted or not paid to the government account after deduction, a Central Board of Direct Taxes statement said.
“Robust growth in direct taxes has been maintained despite substantially higher relief to individual taxpayers announced by the finance minister in the Union Budget 2008. Therefore, higher growth in TDS collections indicates good health of the Indian economy and indicates further improvement in tax administration and tax compliance levels,” it said.
STT registered a 15.10% growth at Rs 2,730 crore during the period. FBT collections rose 31.85% to Rs 1,339 crore. However, revenue from BCTT
fell 21.36% to Rs 274 crore against Rs 348 crore.
Among regions, tax growth in Delhi and Mumbai was 76.23% and 32.49%, respectively. Other regions with high tax growth are Nagpur (88.75%), Kochi (58.07 %), Kolkata (56.82%), Bhubaneshwar (53.59%) and Bangaluru (48%).
The cost of direct tax collection, which had declined to an all-time low of 0.54% during 2007-08, is expected to fall to about 0.43% during the current fiscal, the lowest among all large economies in the world.
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