SLOWDOWN TAKES A TOLL ON DT COLLECTION DIPS 36% IN NOV

 The economic slowdown has cast a shadow over direct tax collections. Collections for November 2008 dropped 36.09% to Rs 10,346 crore from Rs 16,189 crore in November 2007. However, the cumulative growth in April-November, 2008 stood at a respectable 22.2% on the back of robust collections in earlier months. Collections stood at Rs 1,77,251 crore in the first eight months of 2008-09 as against Rs 1,45,053 crore in the corresponding period of the previous fiscal. The more telling numbers would be collections in December, when companies have to pay their advance tax. The department had collected Rs 6,000 crore in ‘self assessment tax’ in November 2007, while this year the tax was paid in October itself. Self assessment tax is the tax that companies pay before they file their returns for the previous fiscal, if they find that they have paid less. If this Rs 6,000 crore is taken out from last year’s November figure, growth in direct tax collections would be flat. But growth in collections in October, on a comparable basis, would have been negative, instead of the 11% that has been reported. Direct tax collections have witnessed a stupendous growth — 31% compound annual growth rate over the four-year period ending 2007-08 — on the back of an economy that grew at 9% a year, and tough revenue administration. But, the recent slowdown, especially in the manufacturing sector, seems to have taken a toll on tax collections as well. India’s GDP grew by 7.8% in the first six months of the current fiscal against 9.3% in the same period last fiscal. Corporate tax collections stood at Rs 5,785 crore this November against Rs 8,448 crore last November — a 31% dip. Adjusting the self-assessment tax that was paid in October this year and November last year, the growth in corporate tax collections in November is an impressive 136%. However, this small comfort is destroyed by the trend in personal income tax (PIT) collections. PIT collections in the month under review stood at Rs 4,560 crore against Rs 7743 crore, a decline of 41%. A Central Board of Direct Taxes statement on Friday said direct tax collections grew by 22.2% to Rs 1,77,251 crore during the first eight months of this fiscal and “appears to be on course”. The statement, however, did not give out the month-on-month data. ET calculated this figure using the official collection figures till October. Corporate tax collection during the period grew by 26.82% to Rs 1,09,735 crore, PIT increased by 15.28% to Rs 67,215 crore. Growth in fringe benefit tax was 34.47% at Rs 4,120 crore against Rs 3,064 crore. Banking cash transaction tax collections stood at 17.33% at Rs 421 crore against Rs 359 crore. Securities transaction tax (STT), however, declined by 15.42% at Rs 4,165 crore against 4,924 crore bearing the brunt of decline in the stock market activity. Growth in corporate tax deducted at source continued to remain robust at 45%, yielding Rs 40,450 crore against Rs 27,892 crore in the period under review. Dividend distribution tax of domestic companies also remained robust at 41.84% at Rs 9,675 crore against Rs 6,821 crore in April-November, 2007, the statement said. The government aims to collect Rs 3,95,000 crore as direct taxes during 2008-09, after it decided to collect Rs 30,000 crore more than the budget figure of Rs 3,65,000 crore. To achieve the initial budget estimate, direct tax collections need to grow by 16.07%.