Direct tax kitty up 17% in May

Ankur Garg (Company Secretary and Compliance Officer)   (114773 Points)

08 June 2009  

Monday 08 June, 2009.


 
Direct tax kitty up 17% in May 

 

 

This is the first time when the direct tax collection has shown positive growth since February 2009.

As the finance ministry is busy finalizing the Budget, the surge in tax collection will help them in keeping the fiscal deficit under control despite huge extra expenditure, which the government would incur in funding the stimulus package.

In April, the collection had declined by 3.19% to Rs 12,239 crore against Rs 12,642 crore in the same month last year.
 
A senior tax official said that the growth in the direct tax collection in May as against the same period last year, when the economy was booming, indicates recovery in the economy.

However, he added that these are the early signs only. A strong growth in the advance corporate tax collection for the first quarter would be a sure proof of the economic recovery.
 
He said that early signs suggest a good realization in the advance tax collection in the first quarter of the current fiscal.

In the first two months of this fiscal, direct tax collections rose by 5.77% from Rs 22,840 crore in the same period last fiscal, according to the figures released by the government on Friday.
 
The statement said that the tax collection figure has gone up despite rise in the refund outgo during the two months.
 
The refunds to non-corporate tax payers grew at 61.7% to Rs 2,149 crore compared to Rs 1,329 crore in the same period last year.
 
The sudden spur in the refund, the department said, is due to faster processing or returns on the new national computer network.

Overall refund outgo in the first two months of the fiscal increased by 26.19% to Rs 11,375 crore a against Rs 9.014 crore in the same period last year.

Because of the slowdown in the economy, the department could not meet the target it fixed for revenue collection in 2008-09.
 
During 2008-09, the government had estimated in the budget to have a corporate tax collection of Rs 2,26,361 crore, showing a growth of 17.34%.
 
Despite the fact that in the first six months of the financial year, when the economy was booming and was not impacted by the global financial crisis, the corporate tax collection grew by 35.5%, it could not meet the budget estimate figure.
 
Ultimately, in 2008-09, the department could collect only Rs 2,13,823 crore a shortfall of around Rs 12,500 crore from the targeted figure.
 
Though, against 2007-08, the collection had shown a growth of 10.84%. In the second half of the fiscal, the corporate tax collection declined by 3.36% to Rs 1,18,541 crore from Rs 1,22,671 crore in the same period last year.
 
Similarly, the personal tax collection of Rs 1,23,967 crore in 2008-09 also could not meet the budget estimate figure of Rs 1,38,314 crore. In 2008-09, personal tax collection increased by only 4.26% as against a target of around 17%.
 
However, in the first half, the collection under personal tax had gone up by 27%. But, in the second half, because of the global economic crisis, the personal tax collection declined by 7.6% to Rs 72,266 crore as against Rs 78,175 crore.

Therefore, the turnaround in May by around 17% has come as a huge positive for the department.