The income tax department has revised the tax collection target for the current financial year to Rs 5.85 lakh crore, up Rs 53,000 crore from the budget target of Rs 5.32 lakh crore. Faced with falling tax collections and a difficult-to-achieve disinvestment target, the government is looking at the revenue department to shore up its kitty for arresting a widening fiscal deficit.

Internally, the income tax department has been asked to collect Rs 53,000 crore more than the budget target, sources told The Indian Express. The net direct tax collection for the first half of 2011-12 was up by a 7 per cent to Rs 1,94,812 crore after a refund of over Rs 62,000 crore. Indirect tax collection was also down with slowdown in economic activities coupled with duty cuts on petroleum products. While tax collection from customs duty fell by 10.9 per cent to Rs 10,126 crore, excise duty collection eased marginally by 0.3 per cent to Rs 11,417 crore.

In June, the government had cut customs and excise duties on crude oil and other products, which led to a loss of Rs 49,000 crore to the exchequer. The government is also unsure of achieving the disinvestment target of Rs 40,000 crore during the current financial year, given the adverse market conditions. The government has been able to mop up just over Rs 1,100 crore by offloading stake in Power Finance Corporation. Sources said the additional mop up is directed to rein in the fiscal deficit which could rise in the wake of additional market borrowings, which incidentally is Rs 53,000 crore.