Gross direct tax collections rose over 37% in April-May 2011 from a year-ago period, indicating at least for now that slowdown has not taken a toll on tax revenues. However, tax experts say any firm conclusion about the impact of the slowdown on revenues can be drawn only when corporates pay first installment of advance tax later this month. All the data releases last week pointed towards a moderation in growth. Net direct tax collections dropped 48% in the first two months to.Rs.12, 954 crore from. Rs.24, 878 crore because of large refunds, data released by the government on Monday showed. Gross tax collections were up at. Rs.50, 405 crore in April-May against. Rs.36, 702 crore. The direct tax collections in the first couple of months mostly include personal income tax and those by professional firm. Corporates pay the first installment of direct tax only in the middle of June. Indias companies pay advance tax four times in a year. A finance ministry official said government would meet the annual target of. Rs.5. 32 lakh crore for 2011-12 and allayed any apprehensions of a possible slowdown impacting direct tax revenues. "Any firm conclusion can be drawn only after advance tax data in June, "the official said adding that when the economy was growing 8%-plus, direct taxes collections had grown by over 25% and there was no reason for worry now. The data released on Tuesday last showed that GDP growth had dropped to a five quarter low of 7. 8% in January-March quarter. The index for infrastructure industries for April and purchasing managers indices for May also point towards moderation in growth. In contrast to government optimism, most independent economists have said the slowdown will make it difficult for the government to achieve the 18% growth in revenues in the current year, forcing government to borrow more to meet the shortfall. On the revenue side, given that the budget estimates factored in real growth of 9%, moderating growth estimates are likely to take their toll on tax collections which are budgeted to rise 18% in FY12, wrote Citi economist Rohini Malkani in a note on June 1. We expect the government to miss its deficit target of 4. 6% of GDP due to both lower revenues and higher expenditures, she wrote. The department of revenue in the finance ministry wants the central board of direct taxes to go slow on refunds given the likely slowdown in revenues. - www.economictime.indiatimes.com
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